Fixed forward contract and Leptokurtic frequency distribution: Difference between pages

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''Risk management - foreign exchange.''
A leptokurtic frequency distribution (or leptokurtotic distribution) has a larger number of values clustered at the peak and in the tails, than a comparable normal distribution with the same variance and mean.
 
A fixed forward contract is a foreign exchange forward contract with no option elements.
 
It can be viewed as a ''plain vanilla'' forward contract.
 
 
Contrasted with a ''dynamic'' forward contract.
 
 
:<span style="color:#4B0082">'''''Corporates act to mitigate FX volatility'''''</span>
 
:Payment fintech Moneycorp suggests a number of ways in which corporates can mitigate the impact of FX exposure...
 
:Make use of forward contracts: Forward contracts, either fixed or dynamic, can be customised to allow companies to lock an exchange rate for a future overseas payment.
 
:''Philip Smith, editor, The Treasurer online - 14 October 2022.''


A possible explanation for this shape is that the market under review is mean reverting for small market movements (explaining the clustering at the peak) and trending for large market movements (explaining the clustering in the tails).


== See also ==
== See also ==
*[[Contract]]
* [[Frequency distribution]]
* [[Corporate]]
* [[Leptokurtosis]]
* [[Deal contingent forward]]
* [[Lognormal frequency distribution]]
* [[Dynamic forward contract]]
* [[Mean reversion]]
* [[Fixing instrument]]
* [[Normal distribution]]
* [[Foreign exchange]]
* [[Normal frequency distribution]]
* [[Foreign exchange forward contract]]
* [[Tail]]
* [[Foreign exchange risk]]
* [[Trend analysis]]
* [[Forward contract]]
* [[Volatility smile]]
* [[Forward exchange market]]
* [[Forward foreign exchange rate]]
* [[Forward market]]
* [[Forward price]]
* [[Forward rate]]
* [[Futures contract]]
* [[Hedging]]
* [[Plain vanilla]]
* [[Risk management]]
* [[Risk response]]
* [[Transfer]]


[[Category:The_business_context]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Cash_management]]
[[Category:Financial_products_and_markets]]
[[Category:Liquidity_management]]

Revision as of 14:19, 23 October 2012

A leptokurtic frequency distribution (or leptokurtotic distribution) has a larger number of values clustered at the peak and in the tails, than a comparable normal distribution with the same variance and mean.

A possible explanation for this shape is that the market under review is mean reverting for small market movements (explaining the clustering at the peak) and trending for large market movements (explaining the clustering in the tails).

See also


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