Foreign Currency Risk Measurement Methods and Application of them in Lithuania
Articles
Juozapas Audvydas Staškevičius
Vilniaus Gedimino technikos universitetas, Verslo ekonomikos katedra
Renata Bagdonienė
Vilniaus Gedimino technikos universitetas, Verslo ekonomikos katedra
Published 2000-12-01
https://doi.org/10.15388/Ekon.2000.16900
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How to Cite

Staškevičius, J.A. and Bagdonienė, R. (2000) “Foreign Currency Risk Measurement Methods and Application of them in Lithuania”, Ekonomika, 51, pp. 115–125. doi:10.15388/Ekon.2000.16900.

Abstract

Risk measurement plays an important role in a general risk management cycle of a company. It is impossible to control a risk and determine potential losses without a performance of quantitative risk estimation.

The article covers the analysis of a contemporary foreign currency risk measurement methods, emphasizes it, strengths and weaknesses. The following methods of a Value at Risk concept are assessed as the most progressive ones: Variance/covariance. Historical simulation and Monte Carlo simulation. Variance/covariance method is suggested for Lithuanian companies to measure their foreign currency risk. The research undertaken proves that this method matches actual changes of the market.

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