Interested to Buy Any Domain ? << Click Here >> for more details...
what is hedging? what is funding? what is deriveatives
market in a lay man language?
- 1 Answers
- 7777 Views
- HDFC, I also Faced
- E-Mail Answers
Answer Posted / samir
Hedge:
Making an investment to reduce the risk of adverse price
movements in an asset. Normally, a hedge consists of taking
an offsetting position in a related security, such as a
futures contract
Funding Agreement:
Funding agreements are marketed to mutual fund companies
and municipal reinvestments. These products are generally
used for their security and flexibility as they can be
altered to meet the specific cash-flow needs of the
contract holder.
Derivative:
In finance, a security whose price is dependent upon or
derived from one or more underlying assets. The derivative
itself is merely a contract between two or more parties.
Its value is determined by fluctuations in the underlying
asset. The most common underlying assets include stocks,
bonds, commodities, currencies, interest rates and market
indexes. Most derivatives are characterized by high
leverage.
Derivatives are generally used to hedge risk, but can also
be used for speculative purposes. For example, a European
investor purchasing shares of an American company off of an
American exchange (using American dollars to do so) would
be exposed to exchange-rate risk while holding that stock.
To hedge this risk, the investor could purchase currency
futures to lock in a specified exchange rate for the future
stock sale and currency conversion back into euros.
| Is This Answer Correct ? | 10 Yes | 1 No |
Post New Answer View All Answers
Explain what are ETF’s? What is the advantage of it?
What Is Materiality?
What is electronic clearing of cheques?
How are sources and applications categorized for proper interpretation of funds flow statement?
Explain the concept of finance accounting?
What is a sales tax?
Tell something about prime lending rate?
What is 'nostro account'?
What are the various sources through which a company can meets its fund requirements?
What does market survey mean?
What do you understand by divestment? How is it different from investment?
What Is Bankruptcy?
Do You Expect Capital Demand In The System To Increase On Average Due To The Stress Test Exercise?
What do the banks do for the society?
what are all the things will consider while doing sensitivity analysis?
