Interested to Buy Any Domain ? << Click Here >> for more details...
Answer Posted / 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 |
Post New Answer View All Answers
What Are Payroll Cards?
Who is the founder of niacl? What do you know about niacl?
How does the default risk premium being calculated?
Explain differential cost.
What are the skills required to become actuarial?
What Is Retail Or Consumer Banking?
What are the most basics financial statements prepared by the companies?
What is the meaning of goodwill? How is it calculated?
What documents are required for kyc?
Expand MSR.
Name the department that handles cyber crime in India?
What can be done to eradicate poverty from the country?
What is cash misappropriation?
What is a Fiscal policy? State its features?
Explain what is cash equity?
