Costs of hedging through forward contract

Discuss and compare the costs of hedging through the forward contract and the options contract.

E

Expert

Verified

There exists no up-front cost of hedging by forward contracts. In case of options hedging, though, hedgers must pay the premiums for the contracts up-front. Cost of forward hedging, though, can be realized ex post when the hedger regrets his/her hedging decision.

   Related Questions in Financial Accounting

  • Q : What is Treasury bills What is Treasury

    What is Treasury bills? What did they do?

  • Q : Pre-requisites to apply Budgetary

    Write down the pre-requisites to apply Budgetary Control?

  • Q : What is Internal Communication Internal

    Internal Communication: Employee or Organizational Communication refers to the phenomenon of interaction among employees that exist in organizations. In other words, it could also be termed as Internal Communications.

    Q : Case study of an Operational-Strategy

    Develop a case study of the Operational-Strategy interface as it applies to organisational change (last 3-5 years) within your organisation, together with a project implementation case study .You are required to detail the operational chan

  • Q : Cash Discount State the definition of

    State the definition of Cash Discount?

  • Q : Calculate the Present Value PV Given

    Given that the appropriate discount rate is 10% and that the first of these dividend payments will occur 1 year from now, find the present value of the dividend stream; that is, calculate the PV of D1, D2, and D

  • Q : Assessing risk in the workplace

    Describe the primary steps in assessing risk in the workplace with respect to Health and safety, identify and discuss what actions should be taken to manage or wipe out the risks posed?

  • Q : Closed-end country funds trading at

    Why closed-end country funds often trade at the premium or discount?

  • Q : Review the accounting cycle the

    Assignment: The purpose of this assignment is to review the accounting cycle--the procedures that businesses normally use to record transactions during the year and prepare financial statements at the end of the year.  The accounting cycle is discussed in Chapter 3 of your textbook. &nb

  • Q : Define the term Debtor Define the term

    Define the term Debtor. Is they our client?

©TutorsGlobe All rights reserved 2022-2023.