These days, people, who are engaged in financial institutions, are expected to be quality future tellers. They should be able to foretell the customers or investors which side the money is flowing and which side it will take a turn. That is, they must know the course of the money flow before hand and must also be able to guide the receiving agencies regarding their course of action, so that the investor's investment is not only safe, but grows to a considerable extent. There is an enormous risk is involved in dealing with investors' money. Therefore, risk management is the buzzword in today's money market. The risk will be minimal if hedging is proper. On the contrary, if the commitment to the investors is more, risk is higher as the financial institutions tend to play in "high risk-high yield" area.
The entire market transactions are dependent on time and any minor miscalculation may cost dearly. For example, if a business transaction is not completed within a stipulated time period, and a price changes take place during that time, then a potentially profitable business may turn sour causing a substantial loss. If there is no arrangement to protect against such loss, future transactions may face a set back. If the same thing happens to many number of transactions, the whole market may collapse.
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