Currency Management

[The Nature Boy]

I find this to be one of the most difficult readings in the curriculum. What percentage of the exam do you realistically expect this will be?

 

[zaydalnakib]

This reading MAY seem extremely difficult at first. The trick is to view EVERYTHING in terms of the base currency. Therefore you can think of it just like a stock.
Example:
USD/EUR = P/B
you expect the euro to appreciate = you expect the stock to increase, buy a call option on euro (the sock)
you expect the euro to derpeciate = you expect the stock to decrease, sell short, sell euro forward, buy a put, etc. on the eur (the stock)
^^ this helped me soooooo much because this reading had my mind spinning