Application of Financial Engineering Instruments in the Russian Automotive Industry

A A Ajupov,A A Kurilova,D U Ivanov

doi:10.5539/ass.v11n11p162

Abstract

The problem of the reducing the financial risks faced by any company in the market economy. The automotiveindustry is also sensitive to currency and commodity risks. The article presents the economic and mathematicalmodel of the creation of option portfolios in the automotive industry, which allows to develop investment andspeculative strategies in the stock market, as well as the methods of hedging currency risks in the automotiveindustry, depending on the net position.

Highlights

In world practice, the use of various financial instruments hedging has long been an integral part of the economic activity of the largest companies.Initially, risk management applied at the unit level corporations and the main task was to reduce the costs incurred by currency fluctuations
Risk management applied at the unit level corporations and the main task was to reduce the costs incurred by currency fluctuations
The main task is considered, on the one hand, the reduction of risks from adverse changes in exchange rates, and on the other - to benefit from favorable changes

Summary

Introduction

The use of various financial instruments hedging has long been an integral part of the economic activity of the largest companies.Initially, risk management applied at the unit level corporations and the main task was to reduce the costs incurred by currency fluctuations. The use of various financial instruments hedging has long been an integral part of the economic activity of the largest companies. The corporation is carried out both short and long-term currency risk management across the organization, using financial and non-financial hedging strategies. In this case, the main task is considered, on the one hand, the reduction of risks from adverse changes in exchange rates, and on the other - to benefit from favorable changes. Under the derivatives are understood financial contracts with standard terms and conditions agreed by the parties or the value of which is a derivative with respect to the underlying asset.

Methods

Results

Conclusion