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:

Answer / guest

Hedging is the process whereby an investor uses two or more
than two options to minimize or manage his risk.

Answer / chandu

hedging is the diversification of risk into various
financial instruments i.e futures,forwards,swaps, etc

Answer / vijay kumayadav

Hedging is the protection against the loss.

Answer / 1234

Hedging is a financial instrument which is used to convert
certainity in to uncertainity.

Answer / ravi julaniya

Superb explaination Anjali......!!!!!!! do u have any email
id??

Answer / sanjeeb kumar panda

Making an investment to reduce the risk of adverse price movements in an asset.

Answer / anil

hedging means minimizing the risk
the investor having any risk he will be choose hedging for
reducing the risk

What does the government do to curb the revenue deficit?

0 Answers   State Bank Of India SBI,

What are quasi sovereign bonds?

0 Answers   LIC,

List Some Features Of Pff?

0 Answers  

What percentage of FDI is allowed in Retail, aviation and broadcasting?

0 Answers   RBI,

Explain a fixed interest investment

0 Answers  

What Is The Difference Between Reserve And Allowance?

0 Answers  

Who are current Miss India, Miss World, Miss Universe etc.?

0 Answers   SEBI,

How would you estimate American Airline's annual revenue?

0 Answers   EXL,

What is Scheduled Bank?

1 Answers  

What are the responsibilities of bill collectors?

0 Answers  

Which newspaper do you read? Any latest news you can recall?

0 Answers   RBI,

Why is debt a cheaper source of finance?

0 Answers