CMA and Hedge ratio: Difference between pages
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imported>Doug Williamson (Add links.) |
imported>Doug Williamson (Add definition. Source - The Treasurer online - https://www.treasurers.org/hub/treasurer-magazine/corporates-act-mitigate-fx-volatility) |
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1. ''Hedging instruments.'' | |||
The proportion of a hedging instrument required to hedge an underlying position, compared with the amount of the underlying position itself. | |||
'''Example''' | |||
If four options are required to hedge a position of one unit of the underlying asset: | |||
Hedge ratio = ¼ | |||
= 0.25. | |||
2. ''Risk management.'' | |||
The proportion of a risk exposure that an organisation chooses to hedge. | |||
Also known as a hedging ratio. | |||
:<span style="color:#4B0082">'''''Corporates increase FX hedging'''''</span> | |||
:“While there will always be some [corporates] that don’t hedge their FX risk at all, those that haven’t are now considering doing so given recent market volatility and negative currency impacts. | |||
:“Those corporates that already had formal hedging programmes in place are now increasing their hedge ratios to protect their bottom lines.” | |||
:''Eric Huttman, CEO at MillTechFX, The Treasurer online - 14 October 2022.'' | |||
== See also == | == See also == | ||
*[[ | * [[Bottom line]] | ||
*[[ | * [[Corporate]] | ||
*[[ | * [[Dynamic hedging]] | ||
*[[ | * [[Foreign exchange risk]] | ||
* [[FX]] | |||
* [[Hedge ]] | |||
* [[Hedge accounting]] | |||
* [[Hedging]] | |||
* [[Risk management]] | |||
* [[Volatility]] | |||
[[Category: | [[Category:Manage_risks]] |
Revision as of 21:31, 13 October 2022
1. Hedging instruments.
The proportion of a hedging instrument required to hedge an underlying position, compared with the amount of the underlying position itself.
Example
If four options are required to hedge a position of one unit of the underlying asset:
Hedge ratio = ¼
= 0.25.
2. Risk management.
The proportion of a risk exposure that an organisation chooses to hedge.
Also known as a hedging ratio.
- Corporates increase FX hedging
- “While there will always be some [corporates] that don’t hedge their FX risk at all, those that haven’t are now considering doing so given recent market volatility and negative currency impacts.
- “Those corporates that already had formal hedging programmes in place are now increasing their hedge ratios to protect their bottom lines.”
- Eric Huttman, CEO at MillTechFX, The Treasurer online - 14 October 2022.