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what is the meaning of hedging?
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Answer / t.mahesh reddy
hedging is a tool for reducing the risk for an investor by
using proper derivatives such as
options,futures,swaps,forwards.Hedging is to protect the
investor from the intrst rate fluctuations and also
exchange rate flutuations.
| Is This Answer Correct ? | 2 Yes | 0 No |
Answer / jagadish
hedging in short is reducing or bringing down the risk is
called hedging
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Answer / smith
Hedging is the process of eliminating exposure to foreign
exchange risk so as to avoid potential losses from
fluctuations in exchange rates. In addition to avoiding
possible losses, companies hedge foreign currency
transactions and commitments so as to introduce an element
of certainty into the future cash flows resulting from
foreign currency activities. Hedging involves establishing
a price today at which foreign currency can be sold or
purchased at a future date.
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Answer / pranai
Hedging is a concept. It is emerged with derivative market.
this concept is used for reduce or eliminate risk of the particular security. (underlying asset)
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Answer / sivareddyn
hedging approach we gather the working capital from the
long term sources when ever firm need more working capital
more than actual they procure from short term sources is
called hedging.
| Is This Answer Correct ? | 12 Yes | 30 No |
what is the entry for cash received and after deposited in to the bank
expand D I N
What will be the entry for transfer of fixed deposit amount to their current a/c. (ie. if we hav a FD of Rs.600000 with the bank, we need to close the FD and transfer the amount to the current Account. kindly provide me the entry for this.
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Expand---------RMD
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8 Answers State Bank Of India SBI,
What are the reason for negative operating cycle?
DHPL is a small sized firm manufacturing hand tools. It manufacturing plan is situated in Haryana. The company’s sales in the year ending on 31st March 2007 were Rs.1000 million (Rs.100 crore) on an asset base of Rs.650 million. The net profit of the company was Rs.76 million. The management of the company wants to improve profitability further. The required rate of return of the company is 14 percent. The company is currently considering an investment proposal. One is to expand its manufacturing capacity. The estimated cost of the new equipment is Rs.250 million. It is expected to have an economic life of 10 years. The accountant forecasts that net cash inflows would be Rs.45 million per annum for the first three years, Rs.68 million per annum from year four to year eight and for the remaining two years Rs.30million per annum. The plant can be sold for Rs.55 million at the end of its economic life. The company would need to raise debt to the extent of Rs.200 million. The company has the following options of borrowing Rs.200 million: a. The company can borrow funds from a nationalized bank at the interest rate of 14 percent for 10 years. It will be required to pay equal annual installment of interest and repayment of principal. b. A financial institution has offered to lend money to DHPL at 13.5 per annum but it needs to pay equated quarterly installment of interest and repayment of principal. Questions: 1. Should the company expand its capacity? Show the computation of NPV 2. What is the annual installment of bank loan? 3. Calculate the quarterly installments of the Financial Institution loan 4. Should the company borrow from the bank or from the financial institution?
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