1997:188). This makes their speech more acceptable to the interlocutor. For example‚ You are mistaken. I think you are mistaken. The second way of saying contains a hedge ‘think’ which helps to soften the force of utterance and makes it less threatening to the hearer. Therefore hedging is closely related to the politeness. When we use hedges to make our
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Deposit rate 8% 5% Borrowing rate 9 6 Given this information‚ determine whether a forward hedge‚ money market hedge‚ or a currency options hedge would be most appropriate. Then compare the most appropriate hedge to an unhedged strategy‚ and decide whether Carbondale should hedge its receivables position. ANSWER: Forward hedge Sell S$500‚000 × $.62 = $310‚000 Money market hedge 1. Borrow S$471‚698 (S$500‚000/1.06 = S$471‚698) 2. Convert S$471‚698 to $283‚019 (at $.60
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1 Hedging Strategies Using Futures Chapter 3 2 Long & Short Hedges • A long futures hedge is appropriate when you know you will purchase an asset in the future and want to lock in the price • A short futures hedge is appropriate when you know you will sell an asset in the future & want to lock in the price • A short hedge is also appropriate if you currently own the asset and want to be protected against price fluctuations 3 Arguments in Favor of Hedging • Companies should
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1. Should multinational firms hedge foreign exchange rate risk? If not‚ what are the consequences? If so‚ how should they decide which exposures to hedge? Generally‚ multinational firms should hedge foreign exchange rate risk. Because foreign exchange risk 1) Affects existing income statement items and balance sheet assets‚ liabilities‚ and equity through translation exposure. 2) Influences the value of outstanding foreign-currency-denominated contracts and obligations‚ thus firm’s earning and
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1.What is a hedge fund? How do hedge funds differ from mutual funds? According to our case‚ Hedge funds are private group investments that offer equity pooling advantages. Hedge funds have limited partnership which are restricted by law to no more than 1000 investors per fund‚ so hedge funds set extremely high minimum investment amounts‚ ranging anywhere from $250‚000 to over $1 million. Hedge funds not only require investors pay a management fee‚ but also collect a percentage of the profits
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Accounting For Derivatives Menurut GAAP‚ semua derivatif harus dinilai pada nilai yang wajar dan dicatat sebagai aktiva atau kewajiban dalam neraca. Kecuali untuk derivatif yang ditunjuk sebagai hedges‚ keuntungan dan kerugian terkait dengan perubahan dalam nilai wajar dari derivatif harus dilaporkan sebagai bagian dari pendapatan bersih setiap tahun. Menurut peraturan tersebut‚ investor diberi informasi tentang nilai-nilai derivatif dan keuntungan dan kerugian yang timbul dari perubahan dalam
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financial position and measure those instruments at fair value. If certain conditions are met‚ a derivative may be specifically designated as (a) a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment‚ (b) a hedge of the exposure to variable cash flows of a forecasted transaction‚ or (c) a hedge of the foreign currency exposure of a net investment in a foreign operation‚ an unrecognized firm commitment‚ an available-for-sale security‚
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Metropolitan (UK)‚ for a total payment of £1‚000‚000. The following exchange rates were available to Pixel on the following dates corresponding to the events of this specific export sale. Assume each month is 30 days. [pic] (a) Assume Leo decides not to hedge the transaction exposure. What is the value of the sale as booked? What is the foreign exchange gain (loss) on the sale? ( The sale is booked at the exchange rate existing on June 1‚ when the product is shipped to Grand Met‚ and the shipment is
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Assignment 1. What is a hedge fund? How do hedge funds differ from mutual funds? Hedge funds are investment vehicles that explicitly pursue absolute returns on their underlying investments. Hedge Fund incorporate to any absolute return fund investing within the financial markets (stocks‚ bonds‚ commodities‚ currencies‚ derivatives‚ etc) and/or applying non-traditional portfolio management techniques including‚ but not restricted to‚ shorting‚ leveraging‚ arbitrage‚ swaps‚ etc. Hedge funds can invest in
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Strategies Using Futures Tutorial 3 - Practice Questions Problem 3.1. Under what circumstances are (a) a short hedge and (b) a long hedge appropriate? A short hedge is appropriate when a company owns an asset and expects to sell that asset in the future. It can also be used when the company does not currently own the asset but expects to do so at some time in the future. A long hedge is appropriate when a company knows it will have to purchase an asset in the future. It can also be used to offset
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