Ways to Hedge Exchange Rate Risk for Kalamazoo College

Abstract

This paper will discuss the various ways in which Kalamazoo College can properly hedge it exchange rate risk. The college has a large part of its study abroad funds that are improperly managed. The College could use the hedging techniques discussed in this paper to properly manage its study abroad funds. This paper will show five basic tools for hedging foreign exchange risk; these tools are a foreign bank accounts, carry trades, forward contract, futures contracts and futures options.