What is a fair value hedge?

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: Explain how to Adjust Trading Security Investments to Fair Value.

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Q: How can derivative security be used to hedge portfolio risk?

A: A derivative is depicted as an investment procedure outlined to assist the financial specialist to…

Q: What is basis risk in relation to futures contract hegding?

A: Basis Risk:Basis risk is a financial risk which arises from the incompatibility in the positions of…

Q: What is a cash flow hedge?

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Q: What is an equivalent process of a money market hedge? Why?

A: Money market hedge A technique of utilizing the money market that has high liquidity, as well as…

Q: WHAT IS THE ADVANTAGE OF offshore trust?

A: Offshore trust companies can be defined as those companies which help customers with a high net…

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: What is a replicating portfolio, and how is it used to find the valueof a derivative security?

A: Portfolio is a collection of investments held by an investor. Replicating portfolio is a financial…

Q: what is the fair value option? explain how the use of fair value option reflect application of the…

A: Fair Value option is that the board has taken an additional step of giving companies the option to…

Q: Explain how alternative investments can act as a hedge against inflation.

A: Alternative Investments:  Stocks, bonds are financial instruments that fall under the category of a…

Q: What is reinvestment rate risk?

A: The reinvestment rate risk is the potential decline in the interest income that tends to be a result…

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: How do derivatives hedge risk?

A:

Q: What is the risk free return?

A: Rate of return is the return percentage which an investor gets from the money which has been…

Q: What is in-the-money option?

A: Option is a financial instrument that gives the right to buy/sell an underlying in future date at a…

Q: What is the risk premium?

A: CAPM is the method of calculating the expected return on investment. The formula to calculate the…

Q: What makes the risk-adjusted discount rate approach appealing?

A: Answer: The approximation of the present cash value for high risk assets is called adjusted discount…

Q: What is the purpose of a cash flow hedge?

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Q: Which tranche of CDOs offers maximum protection to the investment holder ?

A: A collateralized debt obligation also known as CDO is a credit structured finance product which is…

Q: What is the fair value option?

A: Fair value: Fair value is the price at which, both seller and buyer agree to exchange the asset. So,…

Q: What is market risk?

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

Q: What are the implications of interest rate parity theorem.

A: Interest rate Parity:- The interest rate parity (IRP) theory states that the difference between the…

Q: What is exchange rate risk?

A: Exchange rate risk It is a chance of occurrence of loss in the investment value because of uncertain…

Q: What is commercial risk?

A: In financial terms, risk is defined as the possibility that the real profits from an outcome or…

Q: What is the difference between fair value and market fair value?

A: Fair value refers to the value that represents the worth of a particular item. It is the value that…

Q: Why is the reporting of investments and fair value required? Justify your response.

A: Investment refers to the deposits made in securities to earn a regular income and capital…

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

A:

Q: Define risk-free asset?

A: Risk-free means that anything which does not have any kind of risk associated with it. They are free…

Q: What is counterparty risk?

A: Counterparty risk can exist in trading, credit, investment.

Q: What is marketable securities?

A: Balance sheet has different components. On the basis of liquidity, cash and cash equivalents are the…

Q: What are some factors that affect a call option’s value?

A: Options are the strategies opted by investors in which investors have a right but not a commitment…

Q: What are Fidelity Investments?

A: Investments are referred to as the asset or item which is acquired with the aim of generating…

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: es tr ice of an individual security in such a market?

A: Market is efficient that means that information about the security is fully available in market.

Q: What is maturity risk premium (MRP)?

A: normally Maturity risk premium is the extra return that an investor will get for bearing the…

Q: What's the best ETF to buy? And why?

A: ETFs are the best popular traded option for investors looking for growth in their money with both…

Q: What is meant by a derivative investment

A: Derivative is a contract which allows its parties to buy/sell an underlying asset as per the…

Q: risk with practical examples

A: Default risk is the risk that a lender takes on in the chance that a borrower will be unable to make…