none

Abstract In today¡¦s worldwide economy, to stay competitive a company needs to take advantage of every opportunity to lower their costs, to increase margins and realize the saving that can come from doing business overseas. Today trillions of dollars in the currencies trade everyday in markets around the world. The currency markets are considered to be one of the most efficient markets. As companies dealing with import and export, they have exposure to currencies risk. The increasing difficulty in understanding exchange rate determination has led to for corporations how to approach the currency hedging decision. The importance of financial and operational hedges as tools for managing foreign-currency exposure is examined. In this thesis, the three basic methods for evaluating the currency risks are with the use of the spot rate method, the future rate method and the currency options. The results are summarized as follow: 1. In terms of currency exposure, the sport rate method leaves the currency exposure un-hedged. Futures and the options hedge technique are most widely used and the information to evaluate the use of these instruments as a hedging tool is readily available. Still, the less efficiency method is the future rate method. The most effective approach is the currency options, have the advantage of more flexibility than the future rate. 2. By comparison with the future rate and currency options, the future rate is determinate by swap point, the negative connotations attached to its disadvantage is the ¡§fixed currency rate¡¨. No matter the currency moves toward company¡¦s favor or unflavored, the funds to fulfill the forward contract will be exercised in maturity date. Other than the future rate hedge, the currency options are based upon the ¡§Buy Call¡¨. Within a certain period in the future, when currency rate is moving toward currency¡¦s profit or loss, the company could decide to exercise or give up the ¡§Buy Call¡¨. The difference is that the currency option hedge is determined by the ¡§Right to Exercise Buy Call¡¨ or ¡§Right No to Exercise Buy Call¡¨ which give company more flexibility in FX hedging. In conclusion, the re-thinking of currency hedging is conservative because it is single-mindedly focused on risk-reducing approaches to exchange rate risk management.

Large complex construction projects such as building an interstate highway, a dam, a chemical plant, an off-shore oil rig and a waste-to-energy plant often include unpredictable geological conditions, labor supplies, material deliveries, and weather that cause uncertainty. Effective and efficient acquisition and construction require the proactive management of these and other uncertainties to meet performance, schedule, and cost targets. Flexibility in the form of real options can be an effective tool for managing uncertainty and thereby adding value to construction projects. But flexibility can be expensive to obtain, maintain, and implement. Real options theory suggests a general approach and has developed precise valuation models. But these models of simplified real options (compared to managerial practice) have failed to significantly improve practice, partially because of a lack of knowledge of real options use by practicing managers. In contrast, the majority of managerial real options applications are identified, designed, valued, and implemented tacitly by construction managers. Understanding current practice and its similarities and differences with theory is critical for developing operational real options theories that can improve construction practice. Few descriptions of managerial real options practice exist as a basis for improvement. To address this need the current research has experiment subjects manage a simple but uncertain installation project with managerial flexibility. Subjects repeatedly value an option to avoid a slow and expensive system integration failure. Real options theory is used to explain their behaviors by customizing the model of uncertainty to reflect themanagement context. To further analyze managerial real options practice, a system dynamics simulation model of the experimental installation project is developed. Policies for using flexibility to manage uncertainty that are applied by subjects are modeled and performances are simulated across a range of uncertain conditions to evaluate and compare policy effectiveness. All 21 subjects that participated in the research perceived flexibility as an effective tool in managing uncertain projects. But they are not aware of the factors that impact flexibility value. They correctly identified the relationship of some factors with flexibility value but not all of them and not the magnitude of impaction. Further research and development needs for expanding real options theory into the operational management of construction are discussed based on experiment and simulation results.

Thesis (Ph. D.)--University of Chicago, School of Business, 2001. / Includes bibliographical references. Also available on the Internet.

Thesis (Ph. D.)--University of Massachusetts Amherst, 2009. / Open access. Includes bibliographical references (p. 208-221). Print copy also available.

Thesis (M. Econ..)--University of Hong Kong, 2001. / Includes bibliographical references.

Thesis (Ph.D.)--Kent State University, 2008. / Title from PDF t.p. (viewed March 3, 2010). Advisor: Mark Holder. Keywords: diversification; diversification discount; value measurement; real options. Includes bibliographical references (p. 84-89).

Thesis (M. Sc.)--University of Hong Kong, 2002. / Includes bibliographical references (leaves 44-51).

Thesis (Ph. D.)--University of Missouri-Columbia, 2002. / Typescript. Vita. Includes bibliographical references (leaves 199-206). Also available on the Internet.

Thesis (Ph. D.)--University of Missouri-Columbia, 2002. / Typescript. Vita. Includes bibliographical references (leaves 199-206). Also available on the Internet.