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The main focus of this work is on hedging of currency risks with special emphasis on the case of Czech export. In the first chapter, I create a motivation for further studying of the problem. I describe the state of export industries and the economy as a whole and how these aspects are connected to the exchange rates. In the second chapter, I explain how firms create their assumptions about future exchange rates. I also run a Monte Carlo analysis on historical data and come with predictions of my own. In the third chapter, I am discussing the relevance of using VaR models for estimating the maximum possible loss of funds due to unwanted moves in the exchange rate. Furthermore, I describe various instruments usable for hedging of currency exposure including forwards, options, swaps and other derivatives. In the final chapter of this work, I am asking financial and sales directors of 51 Czech firms about how currency risks influence their businesses and how they protect themselves against these threats.

This thesis consists of four essays on topics relating to the fields of international portfolio choice, trading behavior, and asset pricing. "Direct Foreign Ownership, Institutional Investors, and Firm Characteristics" analyzes portfolios of Swedish stocks held by foreign investors. The analysis reveals that foreigners tilt their portfolios to firms with certain attributes. It is also shown that the seemingly specific preferences of foreign investors are driven by the fact that they are large institutional investors, and are not linked to their national origin. "Foreigners' Trades in Risky Assets: An assessment of  Investment Behavior and Performance" analyzes foreigners' trading activities. It is shown that foreigners trade more than domestic investors. Further, they trade as non-informed trend followers in that they buy stocks that have recently done well. Nonetheless, after the liberalization of Sweden's stock market, foreigners' purchases have led to a permanent price increase and to a reduction in the cost of equity capital. "Exchange Rate Exposure, Risk Premia, and Firm Characteristics" shows that about fifty percent of Swedish listed firms are affected by exchange rate fluctuations. The sign and magnitude of exchange rate exposure are characterized across industries as well as firm attributes. The empirical analysis suggests that exposure can be eliminated through diversification, and that exchange rate risk is not priced. "Conditioning Information in Tactical Asset Allocation" examines whether investors can exploit the predictability in time-varying expected returns on Swedish stocks and bonds. It is shown that dynamic allocation strategies, based on conditioning information, significantly outperform several benchmark portfolios. This superior performance is not only statistically significant, it is economically large. / Diss. Stockholm : Handelshögsk.

Företag som agerar på en internationell marknad står inför olika risker men också möjligheter vid en valutafluktuation. Företag som hanterar ett pengaflöde i någon form av utländsk valuta står inför valutaexponering när valutakursen fluktuerar. För att minska valutarisken kan företagen använda sig av olika valutastrategier. Enligt tidigare studier är det vanligare bland större företag att använda valutastrategier medan ’small medium sized enterprises’ (SME) har bristande kunskaper inom ämnet och känner en oro för att använda sig av de verktyg som finns. Eftersom SME-företagen står inför olika valutarisker som hanteras fragmentariskt ämnar denna uppsats att undersöka och analysera svenska SME-företags valutarisker och hur valutaexponeringen reduceras genom valutastrategier. För att besvara uppsatsens syfte valdes en kvalitativ metod med en deduktiv ansats baserad på företagens erfarenhet av ett ämne. Semistrukturerande intervjuer har genomförts med fyra svenska SME-företag som hanterar direkt import och/eller export och därmed påverkas av valutarisker och valutafluktuationer. Resultatet från uppsatsen indikerar på att svenska SME-företags valutarisker har ett signifikant samband mellan verksamhetsstruktur och valutaexponering. Resultatet visar på att valutaexponeringen påverkas beroende på hur företaget hanterar internationell handel vilket stödjer tidigare studier. Det har även visat sig att svenska SME-företag använder sig av valutastrategier genom hedging metoder. Det kan dock konstateras att majoriteten av de analyserade SME-företagen har bristande kunskap vilket stödjer tidigare studier. / Businesses that are internationally based are faced with currency risks but also possibilities. The businesses that are internationally based are faced with currency exposure due to fluctuation. To limit the currency risks businesses can utilize different currency strategies. According to previous studies, larger businesses are more likely to utilize these currency strategies, while small medium sized enterprises (SME) lack the knowledge about currency strategies and thus feel a disquiet about utilizing them. Since SME face a currency risk that is handled in a fragmented way, this paper aims to investigate and analyze Swedish SME currency risks and how they manage currency exposure through currency strategies.   The method used in this study was to implement a qualitative research method with a deductive approach based on the businesses experience of a subject. Semi-structured interviews have been conducted with four Swedish SME that handle import and/or export. Thus, being affected by currency risks and currency fluctuations.  The conclusion drawn from the result of this study indicate that Swedish SME currency risks have a significant relationship between businesses structures and currency exposure. The conclusion supports previous studies that currency exposure is affected depending on how the businesses manage their export and import. The study has also shown that Swedish SME utilize currency strategies through hedging derivatives. Although the majority of the analysed SME have insufficient knowledge about these derivatives which supports previous studies.