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Fundamentals of Corporate Finance: Risk Management: An Introduction to Financial Engineering

Hedging is the process by which a firm attempts to shield itself from the effects of unexpected changes in interest rates, commodity prices, or exchange rates. Increasing volatility in these prices and rates has focused attention on the creation and use of instruments designed to facilitate hedging or "risk management". Risk management is one of the "frontier" areas of finance and brings together topics related to microeconomics, valuation, time value, and, of course, risk and return.











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