Overhedging and Shared Service Centre: Difference between pages

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"'''Overhedging'''" is a form of speculation.
(SSC). Shared Services provide a service by one part of an organisation or group where previously the service had been found in more than one part of the organisation or group. The funding and resourcing of the service is shared so the providing department becomes an internal service provider.  
 
It means intentionally hedging an amount GREATER THAN the total related risk exposure, for example by the use of a derivative instrument with a principal amount of 200% of the related risk exposure. The effect of overhedging in this way is to create a new purely speculative position in the derivative instrument.
 
The size of the new speculative position is equal to the excess of the principal amount hedged, over 100%.
 
 
For example in this case the size of the new speculative position is 200% - 100% = 100%.
In other words equal in size to the original exposure being hedged.
 
 
The new speculative position is in the opposite direction to the original exposure.


== See also ==
* [[Outsourcing]]


== See also ==
* [[Hedging]]
* [[Underhedging]]

Revision as of 14:20, 23 October 2012

(SSC). Shared Services provide a service by one part of an organisation or group where previously the service had been found in more than one part of the organisation or group. The funding and resourcing of the service is shared so the providing department becomes an internal service provider.

See also


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