10. See Gastineau, “The Currency Hedging Decision,” pp 13–14.

11. One suggestion as to why currency markets trend is that central banks attempt to smooth foreign exchange-rate movements through intervention. Thus, because central bank participation in the foreign exchange market is not motivated by profit, their actions keep the market from being truly efficient. See Robert D. Arnott and Tan K. Pham, “Tactical Currency Allocation,” Financial Analysts Journal (May–June 1993), pp. 47–52.

12. See Richard M. Levich and Lee R. Thomas, “The Merits of Active Currency Risk Management: Evidence from International Bond Portfolios,” Financial Analysts Journal (September–October 1993), pp. 63–70.

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