Exchange rate economic exposure and hedging:the significance of currency options

This thesis focuses on the theoretical examination of the exchange rate economic (operating) exposure within the context of the theory of the firm, and proposes some hedging solutions using currency options. The examination of economic exposure is based on such parameters as firms' objectives, industry structure and production cost efficiency. In particular, it examines an hypothetical exporting firm with costs in domestic currency, which faces competition from foreign firms in overseas markets and has a market share expansion objective. Within this framework, the hypothesis is established that economic exposure, portrayed in a diagram connecting export prices and real exchange rates, is asymmetric (i.e. the negative effects depreciation are higher than the positive effects of a currency depreciation). In this case, export business can be seen as a real option, given by exporting firms to overseas customer. Different scenarios about the asymmetry hypothesis can be derived for different assumptions about the determinants of economic exposure. Having established the asymmetry hypothesis, the hedging against this exposure is analysed. The hypothesis is established, that a currency call option should be used in hedging against asymmetric economic exposure. Further, some advanced currency options stategies are discussed, and their use in hedging several scenarios of exposure is indicated, establishing the hypothesis that, the optimal options strategy is a function of the determinants of exposure. Some extensions on the theoretical analysis are examined. These include the hedging of multicurrency exposure using options, and the exposure of a purely domestic firm facing import competition. The empirical work addresses two issues: the empirical validity of the asymmetry hypothesis and the examination of the hedging effectiveness of currency options.

The biology of the lichen Rhizocarpon geographicum: symbionts, growth, ecology, and lichenometry

Rhizocarpon geographicum (L.) DC. is one of the most widely distributed species of crustose lichens. This unusual organism comprises yellow-green ‘areolae’ that contain the algal symbiont which develop and grow on the surface of a non-lichenized, fungal ‘hypothallus’ that extends beyond the margin of the areolae to form a marginal ring. This species grows exceptionally slowly with annual radial growth rates (RGR) as low as 0.07 mm yr-1 and its considerable longevity has been exploited by geologists in the development of methods of dating the age of exposure of rock surfaces and glacial moraines (‘lichenometry’). Recent research has established some aspects of the basic biology of this important and interesting organism. This chapter describes the general structure of R. geographicum, how the areolae and hypothallus develop, why the lichen grows so slowly, the growth rate-size curve, and some aspects of the ecology of R. geographicum including whether the lichen can inhibit the growth of its neighbours by chemical means (‘allelopathy’). Finally, the importance of R. geographicum in direct and indirect lichenometry is reviewed.

Effects of metformin on BRIN-BD11 beta-cell insulin secretory desensitization induced by prolonged exposure to sulphonylureas

Aims: Prolonged exposure of pancreatic beta-cells in vitro to the sulphonylureas tolbutamide and glibenclamide induces subsequent desensitization of insulinotropic pathways. Clinically, the insulin-sensitizing biguanide drug metformin is often administered alongside sulphonylurea as antidiabetic therapy. The present study examines the functional effects of metformin (200 µM) on tolbutamide- and glibenclamide-induced desensitisation. Methods: Acute and prolonged (18 h) effects of exposure to tolbutamide and glibenclamide alone, or in the presence of metformin, were examined in insulin-secreting BRIN-BD11 cells. Results: In acute 20 min incubations at 1.1 mM glucose, metformin increased (1.2-1.7-fold; p <0.001) the insulin-releasing actions of tolbutamide and glibenclamide. At 16.7 mM glucose, metformin significantly enhanced glibenclamide-induced insulin release at all concentrations (50-400 µM) examined, but tolbutamide-stimulated insulin secretion was only augmented at higher concentrations (300-400 µM). Exposure for 18 h to 100 µM tolbutamide or glibenclamide significantly impaired insulin release in response to glucose and a broad range of insulin secretagogues. Concomitant culture with metformin (200 µM) prevented or partially reversed many of the adverse effects on K channel dependent and independent insulinotropic pathways. Beneficial effects of metformin were also observed in cells exposed to glibenclamide for 18 h with significant improvements in the insulin secretory responsiveness to alanine, GLP-1 and sulphonylureas. The decrease of viable cell numbers observed with glibenclamide was reversed by co-culture with metformin, but cellular insulin content was depressed. Conclusions: The results suggest that metformin can prevent the aspects of sulphonylurea-induced beta-cell desensitization. © 2010 Blackwell Publishing Ltd.