What is Hedging?
Answers were Sorted based on User's Feedback
Answer / anjali
Hedging means reducing or controlling risk. An automobile
manufacturer purchases huge quantities of steel as raw
material for automobile production. The automobile
manufacturer enters into a contractual agreement to export
automobiles three months hence to dealers in the East
European market.
This presupposes that the contractual obligation has been
fixed at the time of signing the contractual agreement for
exports. The automobile manufacturer is now exposed to risk
in the form of increasing steel prices. In order to hedge
against price risk, the automobile manufacturer can buy
steel futures contracts, which would mature three months
hence. In case of increasing or decreasing steel prices, the
automobile manufacturer is protected. Let us analyse the
different scenarios:
Is This Answer Correct ? | 14 Yes | 1 No |
Answer / guest
Hedging is the process whereby an investor uses two or more
than two options to minimize or manage his risk.
Is This Answer Correct ? | 4 Yes | 1 No |
Answer / chandu
hedging is the diversification of risk into various
financial instruments i.e futures,forwards,swaps, etc
Is This Answer Correct ? | 4 Yes | 1 No |
Answer / vijay kumayadav
Hedging is the protection against the loss.
Is This Answer Correct ? | 3 Yes | 1 No |
Answer / 1234
Hedging is a financial instrument which is used to convert
certainity in to uncertainity.
Is This Answer Correct ? | 3 Yes | 2 No |
Answer / ravi julaniya
Superb explaination Anjali......!!!!!!! do u have any email
id??
Is This Answer Correct ? | 0 Yes | 0 No |
Answer / sanjeeb kumar panda
Making an investment to reduce the risk of adverse price movements in an asset.
Is This Answer Correct ? | 0 Yes | 0 No |
Answer / anil
hedging means minimizing the risk
the investor having any risk he will be choose hedging for
reducing the risk
Is This Answer Correct ? | 0 Yes | 0 No |
What Is The Securities Transaction Tax?
0 Answers Ernst Young, Thomson Reuters,
Where does closing stock appear in the trial balance?
Tell us about your latest qualification?
Explain share capital and reserves and surpluses.
I HAVE TO APPEAR IN A INTERVIEW FOR THE POST OF SENIOR ASSISTANT-FINANCE , PLEASE SUGGEST ME WHAT TYPE OF QUESTIONS THEY SHOULD ASK ME .
What details does the deposit register cover?
What is return on shareholder s funds?
What is Prime Lending Rate?
What is current assets turnover ratio?
SOME QUESTIONS BASED ON YOUR ACADEMIC BACK GROUND
What will your work strategy in handling the recent changes in the banking sector?
how many companies are thr in BSE and NSE? how many companies are common in both BSE and NSE?