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Definition of Dynamic hedging
A strategy that involves rebalancing hedge positions as market conditions change; a
A dynamic hedging strategy using options with continuous adjustment of the number of options
The practice of hedging with a futures contract that is different from the underlying being
An asset allocation strategy in which the asset mix is mechanistically shifted in
A strategy designed to reduce investment risk using call options, put options, short selling, or futures
Reducing one's exposure to risk by buying and selling contracts for future delivery (of foreign currency, for example) at a price that is determined now.
Demands for securities to hedge particular sources of consumption risk, beyond the usual
A protection against borrower fallout risk in the mortgage pipeline.
An estimation of price that uses the average or representative price of a
Strategies that involve a position in an option as well as a position in the
Refers to the volatility of returns on international investments caused by events associated
A provision under which default on one debt obligation triggers default on another debt
One corporation holds shares in another firm.
The exchange rate between two currencies expressed as the ratio of two foreign exchange rates
A statistical methodology applied to a set of firms at a particular point in time.
The return at which two alternative projects have the same net present value.
Also called the hedge ratio, the ratio of the change in price of a call option to the change in price of the
The rate of change of the price of a derivative security relative to the
The value of the portfolio is not affected by changes in the value of the asset on which the
A transaction that reduces the risk of an investment.
A securities transaction that reduces or offsets the risk on an existing
A fund that may employ a variety of techniques to enhance returns, such as both buying and
Excess inventories kept on hand as a buffer against contingent
Hedge ratio (delta)
The ratio of volatility of the portfolio to be hedged and the return of the volatility of the
A portfolio consisting of the long position in the stock and the short position in the call
The purchase of a futures contract(s) in anticipation of actual purchases in the cash market. Used
Money market hedge
The use of borrowing and lending transactions in foreign currencies to lock in the
A financial result in which the profit and loss from the underlying asset and the hedge position
Related: short hedge.
The sale of a futures contract(s) to eliminate or lessen the possible decline in value ownership of
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