Zusammenfassung der Ressource
Hedging
- it is
- a process for managing risk and achieving objectives
- methods
- Contractual agreements
- nonstandardized
agreements between
two parties
- Forward contracts
- transfer of commodities,
securities or currencies at a
specified time in the future
- Futures contracts
- standardised instrument
regulated by external
bodies
- Options contracts
- unilateral contract where the
buyer has the right, not the
obligation to exercise
- types
- long hedge
- is a buy position
- physical and financial
- short hedge
- is a sell position
- physical and financial
- concepts
- time
- identifies the length of
temporal distance between
two decisions
- interest
- positions can
either cost or earn
interests
- volatility
- considers the potential of
change; it is the statistical
variation about a mean
- time value of money
- it dictates the
financial feasibility
of basis trades
- properties
- economic validity
- reasonable correlative movements
- convergence
- consistent basis behavior