Hedging Commandments

As treasurer of the U.S. operations of Swiss pharmaceutical maker Ciba-Geigy Ltd., Walter D. Hosp helps protect a $5 billion global cash hoard with an array of options, swaps, and other derivatives. But Hosp maintains a healthy respect for these instruments. "Derivatives," he says, "are nothing more than a set of tools. And just as a saw can build your house, it can also cut off your arm if it isn't used properly."

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