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CFA Level 3
Derivatives & Currency Mgmt

Understanding Currency Overlay in Portfolio Management

Very Easy Currency Management Currency Overlay

In the context of currency management, currency overlay refers to an investment strategy designed to manage the currency exposures of a portfolio. This strategy is often applied to hedge funds, pension funds, and other institutional investors who seek to optimize their returns relative to foreign currency risks. Your task is to explain the purpose of currency overlay, detailing how it enhances a portfolio's risk-return profile.

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