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Article: International tenders and futures hedging
Title | International tenders and futures hedging |
---|---|
Authors | |
Issue Date | 2006 |
Publisher | John Wiley & Sons Ltd. The Journal's web site is located at http://www3.interscience.wiley.com/cgi-bin/jhome/7976 |
Citation | Managerial And Decision Economics, 2006, v. 27 n. 7, p. 587-594 How to Cite? |
Abstract | This paper examines the optimal bidding and hedging decisions of a risk-averse firm that takes part in an international tender. The firm faces multiple sources of uncertainty: exchange rate risk, risk of an unsuccessful tender, and business risk. The firm is allowed to trade unbiased currency futures contracts to imperfectly hedge its contingent foreign exchange risk exposure. We show that the firm shorts less (more) of the unbiased futures contracts when its marginal utility function is convex (concave) as compared with the case that the marginal utility function is linear. We further show that the curvature of the marginal utility function plays a decisive role in determining the impact of currency futures hedging on the firm's bidding behavior. Sufficient conditions that ensure the firm bids more or less aggressively than in the case without hedging opportunities are derived. Copyright © 2006 John Wiley & Sons, Ltd. |
Persistent Identifier | http://hdl.handle.net/10722/85637 |
ISSN | 2023 Impact Factor: 2.5 2023 SCImago Journal Rankings: 0.555 |
ISI Accession Number ID | |
References |
DC Field | Value | Language |
---|---|---|
dc.contributor.author | Lien, D | en_HK |
dc.contributor.author | Wong, KP | en_HK |
dc.date.accessioned | 2010-09-06T09:07:27Z | - |
dc.date.available | 2010-09-06T09:07:27Z | - |
dc.date.issued | 2006 | en_HK |
dc.identifier.citation | Managerial And Decision Economics, 2006, v. 27 n. 7, p. 587-594 | en_HK |
dc.identifier.issn | 0143-6570 | en_HK |
dc.identifier.uri | http://hdl.handle.net/10722/85637 | - |
dc.description.abstract | This paper examines the optimal bidding and hedging decisions of a risk-averse firm that takes part in an international tender. The firm faces multiple sources of uncertainty: exchange rate risk, risk of an unsuccessful tender, and business risk. The firm is allowed to trade unbiased currency futures contracts to imperfectly hedge its contingent foreign exchange risk exposure. We show that the firm shorts less (more) of the unbiased futures contracts when its marginal utility function is convex (concave) as compared with the case that the marginal utility function is linear. We further show that the curvature of the marginal utility function plays a decisive role in determining the impact of currency futures hedging on the firm's bidding behavior. Sufficient conditions that ensure the firm bids more or less aggressively than in the case without hedging opportunities are derived. Copyright © 2006 John Wiley & Sons, Ltd. | en_HK |
dc.language | eng | en_HK |
dc.publisher | John Wiley & Sons Ltd. The Journal's web site is located at http://www3.interscience.wiley.com/cgi-bin/jhome/7976 | en_HK |
dc.relation.ispartof | Managerial and Decision Economics | en_HK |
dc.rights | Managerial and Decision Economics. Copyright © John Wiley & Sons Ltd. | en_HK |
dc.title | International tenders and futures hedging | en_HK |
dc.type | Article | en_HK |
dc.identifier.openurl | http://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0143-6570&volume=27&spage=587&epage=594&date=2006&atitle=International+Tenders+and+Futures+Hedging | en_HK |
dc.identifier.email | Wong, KP: kpwongc@hkucc.hku.hk | en_HK |
dc.identifier.authority | Wong, KP=rp01112 | en_HK |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1002/mde.1276 | en_HK |
dc.identifier.scopus | eid_2-s2.0-33845262028 | en_HK |
dc.identifier.hkuros | 134723 | en_HK |
dc.relation.references | http://www.scopus.com/mlt/select.url?eid=2-s2.0-33845262028&selection=ref&src=s&origin=recordpage | en_HK |
dc.identifier.volume | 27 | en_HK |
dc.identifier.issue | 7 | en_HK |
dc.identifier.spage | 587 | en_HK |
dc.identifier.epage | 594 | en_HK |
dc.identifier.isi | WOS:000213307700006 | - |
dc.publisher.place | United Kingdom | en_HK |
dc.identifier.scopusauthorid | Lien, D=7006094582 | en_HK |
dc.identifier.scopusauthorid | Wong, KP=7404759417 | en_HK |
dc.identifier.issnl | 0143-6570 | - |