--%>
Assignment Help - homework help

Hedgers and Speculators

Explain hedgers and speculators are two types of economic agents required for a derivatives market to function.

E

Expert

Verified

Speculators and Hedgers are two types of market participants which are necessary for the operation of derivatives market.  Speculator attempts to profit from change in the futures price.  For doing this, speculator will take a short or long position in futures contract which depends on his expectations of future price movement.  Whereas, a hedger wishes to provide the price variation by locking in the purchase price of underlying asset through a long position in the futures contract or the sales price through a short position.  In effect, hedger passes off the risk of price variation to the speculator who is able, or at least more eager, to bear this risk.

   Related Questions in Financial Accounting

  • Q : Factors influencing real estate market

    What are the factors which influences real estate market?

    		•
  • Q : Backward and forward internalization

    Discuss and compare the backward vs. forward internalization.

    		•
  • Q : Different brooks of accounting Write

    Write down the different brooks of accounting?

    		•
  • Q : Increase the return without any

    Suppose that treasurer of IBM has an extra cash reserve of $1,000,000 to invest for the six months. Six-month interest rate is 8% per annum in U.S. and 6% per annum in the Germany. Presently, spot exchange rate is DM1.60 per dollar and six-month forward exchange rate

    		•
  • Q : Universities Essay topics I have a

    I have a problem with the following Essay topics illustrated below: Topic A:What is the ultimate goal of yoga practice according to Patanjali, and how do

    		•
  • Q : Creativity and the Individual What are

    What are the various aspects of Creativity on an individual in the creative industry ?    

    		•
  • Q : Applications of Matlab in Embedded

    Do you face difficulty with embedded system problems using matlab? Do you require help in embedded system assignment and project? We have team of tutors who are highly qualified and practiced in embedded system using matlab. They have vast industrial knowledge of matlab. W

    		•
  • Q : Asian firms building the production

    Since NAFTA was developed, several Asian firms particularly those from the Korea and Japan has made the extensive investments in the Mexico. Why do you think these Asian firms decided to build the production facilities in the Mexico?

    		•
  • Q : What is Asset Disposition Asset

    Asset Disposition: Getting rid of the asset or security via a direct sale or some other technique. Quite frequently you will observe insider trades report a "disposition" of some number of shares; this merely means that they sold them.

    Q : Proceeds on disposal The following

    The following information is taken from the financial statements of an entity: 20x4 20x3 Property, plant and equipment $4,600,000 $4,200,000 Accumulated depreciation (1,800,000) (1,350,000) Depreciation expense 560,000 Gain on disposal of PPE 65,000 The asset disposed of had a cost

    		•