Hedging can also be used to made risk. A hedge is an investment position
intended to offset potential losses that may be incurred by a companion investment. A hedge can be constructed from many types of financial instruments
including stocks exchange-traded funds insurance forward contracts swaps options many types of over-the-counter and derivative products and futures
contracts (Doupnik & Perera 2012). When used in international trade hedging is the process of eliminating exposure to foreign exchange risk so as to
avoid potential losses from fluctuations in exchange rates (Doupnik & Perera 2012). In addition to avoiding possible losses companies hedge foreign
currency transactions and commitments to introduce an element of certainty into the future cash flows resulting from foreign currency activities. Hedging
involves establishing a prize today at which foreign currency can be sold or purchased at a future date (Doupnik & Perera 2012).
Doupnik T. S. & Perera M. H. B. (2012). International Accounting. New York: McGraw-Hill
Based on your research are the ethical issues relating to using derivatives in risk management?