Hedging: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Link with qualifications pages.) |
imported>Doug Williamson (Updated entry. Source ACT Glossary of terms) |
||
| Line 1: | Line 1: | ||
1. | |||
Traditionally hedging refers to the process whereby a firm uses financial instruments (such as forward contracts, futures contracts or options) or other techniques to reduce the impact of fluctuations in such factors as the market price of credit, foreign exchange rates, or commodity prices on its profits or corporate value. | Traditionally hedging refers to the process whereby a firm uses financial instruments (such as forward contracts, futures contracts or options) or other techniques to reduce the impact of fluctuations in such factors as the market price of credit, foreign exchange rates, or commodity prices on its profits or corporate value. | ||
2. | |||
The application of hedging techniques has been extended to the management of many other risks including for example inflation and longevity risk arising in pension funds. | The application of hedging techniques has been extended to the management of many other risks including for example inflation and longevity risk arising in pension funds. | ||
Revision as of 16:21, 25 November 2014
1.
Traditionally hedging refers to the process whereby a firm uses financial instruments (such as forward contracts, futures contracts or options) or other techniques to reduce the impact of fluctuations in such factors as the market price of credit, foreign exchange rates, or commodity prices on its profits or corporate value.
2.
The application of hedging techniques has been extended to the management of many other risks including for example inflation and longevity risk arising in pension funds.
See also
- Arbitrage
- Authorisation
- Authority limits
- Basis risk
- CertFMM
- Covering
- Delta hedging
- Foreign exchange forward contract
- Futures
- Hedge accounting
- Inflation risk
- Interest rate guarantee
- Longevity
- Macro hedging
- MCT
- Option
- Outturn
- Overhedging
- Pre-settlement risk
- Guide to risk management
- Speculation
- Uncovered
- Underhedging
- Warehousing
