Financial derivatives as a tool for modern corporation

The objectives of the thesis are to describe financial derivatives in a theoretical way and the situations in which they can be applied. How multinational corporations can take advantage of them in different kind of activities. Thesis consist of three chapters. In first chapter there are considered opportunities and threats for a domestic company to expand its activities abroad. It includes the consideration of which necessary activities must be taken prior to the expansion and which most important analysis must be carried out. Finally there is presented the way of dealing with a risk of currency fluctuations and the analysis of exposures that a multinational corporation must face. The second chapter includes a theoretical description and pricing of various types of financial derivatives. It is divided into section of options, futures with forward and swaps. All derivatives type is considered as a tool for hedging and speculations. There are also presented possible outcomes of using derivatives in situations when a market is not in equilibrium and arbitrage possibilities exist. In the third chapter a practical case of a multinational corporation is used as an expample of Lufthansa Group. There are investigated the types of exposures for running a business that this multinational faces and which types of derivatives are used to deal with them. It is analyzed the value of financial derivatives in that corporation, the internal policy to use them, the prerequisites to apply them and the effect of financial derivatives on a company's profitability and financial position.