s or by speculators to protect against or as a means of exploiting existing price differentials in two or more markets. Hedging assumes significance with respect to the conduct of international business because international currency exchange rate fluctuations can affect, often to a significant extent, the return on the investment denominated in the investor's home country currency (Thomas, 1988, p. 68).
Fischer Black (1989, p. 16) said that participants in international business may consider "hedging a 'zero sum game.' After all, if U.S. investors hedge their Japanese investments, and Japanese investors hedge their U.S. investments, then when U.S. investors gain on their hedges, Japanese hedgers lose, and vice versa. But even though one side always wins and the other side always loses, hedging reduces risk for both sides." Matthew Celebuski, Joanne Hill, and John Kilganon (1990, p. 16) contended that most participants in international business "treated currency exposure in international investment decisions in a linked fashion. In fact, much of
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