. Out of the money means a call option whose strike price is higher than the market price of the underlying security, or a put option whose strike price is lower than the market price of the underlying security. A foreign currency option is a contract that provides the right to buy or sell a given amount of currency at a fixed exchange rate on or before the maturity date (these are known as “American” options; “European” options may be exercised only at maturity).
The use of options for hedging purposes is straightforward. Suppose a US importer is buying equipment from a Swiss manufacturer, with a SF1 million payment due in December. The importer can hedge against a franc appreciation by buying a call option that confers the right to purchase francs over the next three months, until the December maturity (European options), at a specified price. Specifically, assume that the current spot exchange rate is $0.70 per franc. At this exchange rate, SF1 million would cost $700,000. If the franc appreciated to $0.75 over the next three months, then using the spot market in three months would change the value of the imports to $750,000 (0.75*SF1,000,000), an increase in the price of the imports of $50,000. The call option will provide insurance against such change. However, an American call option may be not suitable here, because there will be more uncertainty in the next three months.
(我按照你提供的内容又重新改写了，不过如此多的内容，400字就不够了，只能阐述一个定义，如果还有问题再商榷。由于你只提供了几个关键词，方向不太好把握，见谅)
<英语论文网 【http://www.51lunwen.org】P>Q3 BRIC----Emerging Markets: invest to there: India, China, Brazil, Russia
Over the next 50 years, Brazil, Russia, India and China—the BRICs economies—could become a much larger force in the world economy.
During the 1960s and 1970s, Brazil successfully implemented import substitution models, which increased economic growth and allowed its industrial sector to develop and diversify, since it did not have to deal with foreign competition with greater market power. This strategy also helped the country to reduce its reliance on coffee as its main export, so it succeeded on moving from an agricultural economy to a manufacturing one.
Trade liberalization did not occur until 1990, since the 1980s were spent stabilizing the economy after suffering from the oil shocks and dealing with the budget deficit created by import substitution. The reforms reduced tariffs and other trade barriers.
Even after these reforms were in place, foreign direct investment has been slow to enter the country, and export growth has not been nearly as high as the other countries mentioned in this text. One reason is that corporate taxes are quite high and there is limited financing for small businesses, which constrains Brazilian exporters. Real interest rates are still high because the public sector continues to borrow heavily. Inflation has been continuously high in the country (it once experienced 2,000 percent), even through the decades of growth. Income distribution
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