For a Hedge on an Exposed Position, Describe the Process

Question

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The Answer is a. Calculate the fair value of the forward contract*:
Original Fwd. Value of Contract

\frac { ext { Current Fwd. Value of Contract }} { ext { Change gain (loss) in forward value} }

* The number of days forward is based on the number of days remaining until the settlement date.

b. Calculate the present value of the change:
Change in forward value discounted at a rate of interest

\div 12

periods, for

\mathrm { n } =

number of months until settlement

c. Calculate the change in present value:
Current Present value of contract
Frior Present value of contract
Change in Present Value

For a Hedge on an Exposed Position, Describe the Process

Essay

Correct Answer:
Verified

For a Hedge on an Exposed Position, Describe the Process

Essay

Correct Answer:VerifiedShow Answer

Correct Answer:
Verified