What is the purpose of a cash flow hedge?

Q: Explain what a “riskless hedge” is and how the riskless hedge concept is used in theBlack–Scholes…

A: Riskless hedging: It is the process of buying the stock as well as sell call options simultaneously…

Q: What is Interest Rate Risk and Cash Flow Risk

A: Interest rate risk: The interest rate risk is the risk that occurs due to the change in the interest…

Q: What Is Hedge against Marketplace Uncertainty?

A: Hedging is referred as the risk management strategy used to offset losses in investments by taking…

Q: What is hedge accounting?

A:

Q: Describe the process of a money market hedge for payables. Please do not just rewrite the formula,…

A: Money-market is a market that provides funds for a short-term loan or less than a year. There are…

Q: What is a cash flow hedge?

A:

Q: Describe the procedure of Estimating Risky Cash Flows?

A: Risky cash flow means the future cash flow which falls short of the expectations. This shortage may…

Q: What are the risks of investing in an ESOP?

A: ESOP stands for Employee Stock Ownership Plan. It is a plan that gives an ownership interest in the…

Q: Is an investment pool is equivalent to a firm's treasury? How?

A: Introduction Investment is an important financial activity of an organisation. Every Organisations…

Q: what is money market hedge

A: A money market hedge is a helpful tool that helps firms to maintain the exchange rate risk.

Q: Define cash flow hedges.

A: Derivatives:   Derivative is a product whose value is derived from underlying assets called base.…

Q: The finance function is primarily interested in the relationship between the risks of investments…

A: As per the guidelines, only one question is allowed to be solved. please resubmit the question…

Q: What is the causes of the financial risk?

A: financial risk - financial risk is the possible danger of losing money from an investment made by…

Q: Probability of achieving cash flows Distribution of hedged cash flows

A: If the cash flow are hedged than there are more chances of achieving the cash flow and if not hedged…

Q: What are free cash flows?

A: Companies always estimate cash flows to know the financial conditions of the company because it is a…

Q: How are changes in the fair value of an option accounted for in a cash flow hedge? In a fair value…

A: Cash flow hedge: Cash flow hedge is the process of reducing or eliminating the risk of charges in…

Q: What role do marketable securities play in current asset management?

A: Answer: The management of current assets has acquired a distinctive positive for marketable…

Q: What is equity security?

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…

Q: Define the term exposure to financial risk?

A: The question is based on the concept of Financial risk and its exposure.

Q: What is Interest Risk and Cash Flow Risk?  What is the difference between Interest Risk and Cash…

A: Risk exists in all business operations and transactions however the business should take actions to…

Q: a) What is the general characteristics of Risk Financing – Risk Retention Methods

A: Hi, Thanks for the Question, Since you asked multiple questions, we will answer first question for…

Q: Define Money market fund

A: Introduction: Usually a financial market is a place of market on which financial instruments such as…

Q: For accounting purposes, what type of hedge is the forward contract? a. A cash flow hedge b. A…

A: A forward contract is a contract between the two parties in which both parties agrees to exchange…

Q: What is hedge portfolio?

A: Hedge portfolio It consists of the long position in a security i.e stock and also the long position…

Q: Explain with an example of how we can balance cash investments?

A: Cash investments are short term investments, normally less than 90 days, which usually provides…

Q: How can we estimate Risky Cash Flow?

A: Companies always predict the cash flows related with the project because it helps to company to…

Q: What is market risk?

A: Investments in assets are subject to risks and uncertainty of returns  Risks can be systematic or…

Q: What is a fair value hedge?

A: Fair value hedge: It is a hedging method to manage the risk of changes in the fair value of a…

Q: Describe the process of estimating Risky Cash Flows?

A: Process of estimating Risky Cash flows.

Q: What is the purpose of a fair value hedge?

A:

Q: What is hedge fund?

A: Hedge funds are the type of funds that are established by the private investment partnership or…

Q: Explain Interest Rates and Risk?

A: Interest Rate: Interest rate is the percentage of interest charge by a lender on his principal…

Q: What are the strenghts and weaknesses of the discount cash flow methods?

A: discounted cash flow methods are used to calculate to find the future cash inflow discount into its…

Q: What is the difference between Cash Flow Risk and Interest Rate Risk? Please explain it clearly so…

A: Risk is referred to as the possibility of putting oneself or someone in unfortunate…

Q: What is free cash flow valuation model?

A: Free cash flow (FCF) is the amount of money available to an organization at their complete disposal,…

Q: Explain the interest rate risk?

A: The amount charged by a lender to a borrower for any type of debt is referred to as an interest…

Q: Explain the Hedging against cash flow risk.

A: Hedging is a strategy by which a financial instrument is used to minimize the risk created by the…

Q: What is Interest Risk and Cash Flow Risk?

A: Risk exists in all business operations and transactions however the business should take actions to…

Q: What does “investment risk” mean?

A: Risk is referred as uncertainty or loss. Financial risk is referred as the variability of actual…

Q: Explain why a security is considered to be liquid and state its advantage to an investor

A: A liquid asset is a resource that can be quickly transformed within a short period of time into…

Q: What is money market fund?

A: Introduction: Money market is a market place where the short-term securities transactions are made.…

Q: How are total risk, market risk, and diversifiable risk related?

A: There are different types of risk associated with the investment. Some can be controlled and some…