6044634
Description
Mind Map by Maritza Soto, updated more than 1 year ago
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Created by Maritza Soto
over 7 years ago
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Hedging
- it is
- a process for managing risk and achieving objectives
- a process for managing risk and achieving objectives
- methods
- Contractual agreements
- nonstandardized
agreements between
two parties
- nonstandardized
agreements between
two parties
- Forward contracts
- transfer of commodities,
securities or currencies at a
specified time in the future
- transfer of commodities,
securities or currencies at a
specified time in the future
- Futures contracts
- standardised instrument
regulated by external
bodies
- standardised instrument
regulated by external
bodies
- Options contracts
- unilateral contract where the
buyer has the right, not the
obligation to exercise
- unilateral contract where the
buyer has the right, not the
obligation to exercise
- Contractual agreements
- types
- long hedge
- is a buy position
- physical and financial
- is a buy position
- short hedge
- is a sell position
- physical and financial
- is a sell position
- long hedge
- concepts
- time
- identifies the length of
temporal distance between
two decisions
- identifies the length of
temporal distance between
two decisions
- interest
- positions can
either cost or earn
interests
- positions can
either cost or earn
interests
- volatility
- considers the potential of
change; it is the statistical
variation about a mean
- 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
- it dictates the
financial feasibility
of basis trades
- time
- properties
- economic validity
- reasonable correlative movements
- convergence
- consistent basis behavior
- economic validity
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