This article first appeared in Profit & Loss. It was written by Ken Monahan, Greenwich Associates, specifically for Bloomberg. Corporations are among the most important customers of FX trading desks.

Companies often try to protect their assets from various risks in a process known as hedging. Think of hedging as being similar to buying auto insurance. When you're out driving your car, there is a ...

A fair value hedge protects against a change in fair value of a recognized asset or liability or of an unrecognized firm commitment attributable to a particular risk. The characteristics of a fair ...

Basis risk refers to the potential mismatch between the value of an asset or liability and the financial instrument used to hedge or manage its risk. This divergence can result in unexpected gains or ...

Positive drift follows a steady trend in the underlying asset, whatever the trend direction and the ETF direction. It means positive drift may come with a gain or a loss for the ETF. Negative drift ...

A detailed analysis examines various methods to protect investments when market downturns occur. The article reviews several techniques and provides insight into how each strategy works. Investors can ...

Translation risk is the foreign exchange risk associated with the translation of net investments in foreign operations into a group’s presentation currency when preparing consolidated financial ...

The Financial Accounting Standards Board issued a new accounting standards update Tuesday aimed at improving its existing hedge accounting guidance. It expands the hedged risks that are allowed to be ...