Derivatives are often used to hedge the purchase and sale of commodities, as well as against...
Derivatives are often used to hedge the purchase and sale of commodities, as well as against currency transactions. Please comment in 200 words or more on how hedging is used by businesses to mitigate risk.
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Homework Answers
Hedging is a method employed by businesses to mitigate financial risk. Hedging uses financial instruments called derivatives to hedge the risk of financial loss. Derivative contracts used for hedging are forwards, futures and options. Forwards and futures contracts provide for buying/selling a specified quantity of the underlying asset at a specified price on a specified date. Option contracts give the option holder the option to buy or sell a specified quantity of the underlying asset at a specified price on a specified date.
A business which is a net buyer of commodities, such as a manufacturing firm, can use forward/future/call-option contracts to lock-in to the price at which the commodity will be purchased.
A business which is a net seller of commodities, such as a mining firm, can use forward/future/put-option contracts to lock-in to the price at which the commodity will be sold.
A business which needs to purchase foreign currency in the future, such as an importer, can use forward/future/call-option contracts to lock-in to the price at which the foreign currency will be purchased.
A business which needs to sell foreign currency in the future, such as an exporter, can use forward/future/put-option contracts to lock-in to the price at which the foreign currency will be sold.
In this way, businesses can mitigate financial risk by using derivatives.
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Derivatives are often used to hedge the purchase and sale of
commodities, as well as against...
Non-financial companies that deal with exchange rates have two strategic choices to safeguard against currency risks:...
Non-financial companies that deal with exchange rates have two strategic choices to safeguard against currency risks: currency hedging and strategic hedging. The former involves the use of forward transactions, which necessitates some expectations or forecasts of future rates. Strategic hedging, meanwhile, entails the spreading out of a firm’s activities in a number of different currency zones in order to offset losses in any one zone. While currency hedging can largely be performed by a small group of experts, strategic hedging...
Please write and paraphrase ‘ Advantages and Disadvantages of Swaps contract method . (150 words )...
Please write and paraphrase ‘ Advantages and Disadvantages of Swaps
contract method . (150 words )
Use information from Google source
Citations and references need
I shown simple with attach photo ( cannot copy)
Aab automa Head 2017, p. 12). (2) (a) Critical evaluation of method (A) Currency swaps Currency swaps are generally used to access a cheaper source of financing in the desired foreign currency without having to access foreign capital markets. A higher cost of debt for a...
Q: Please write ˜ Advantages and Disadvantages of Swaps contract method . (150 words ) Note...
Q:
Please
write ˜ Advantages and Disadvantages of Swaps contract method .
(150 words )
Note -
Use information from Google source
******
Citations and references need *****
I
shown simple with attach photo ( cannot copy)
Some apps could automatically update Heading 2 Tide ubde Emph. No Spacing Heading1 (2) (a) Critical evaluation of method (A)- Currency swaps Currency swaps are generally used to access a cheaper source of financing in the desired foreign currency without having to access...
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here is the homework with questions in english. It is due in one day, can I...
here is the homework with questions in english. It is
due in one day, can I get this by today please?
*60% 22:16 + Homework.pdf @ : Guidelines: Your essays for the three questions must not exceed 1000 words (an average of 300 words per question). QUESTIONS 1. What is the most used form of money today? This evolution has made at the expense of what form of money and will be made in the future for the benefit of...
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Can anyone answer the question and explain it thx alot 22. Jet engine manufacturing entails enormous...
Can anyone answer the question and explain it thx alot
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Use the following image to answer the question QUESTION: A cash payment for the purchase of...
Use the following image to answer the question
QUESTION:
A cash payment for the purchase of inventory requires a credit
to inventory.
o True
o False
1. Use the template below to indicate how the following transactions affect the accrual-basis accounting equation: a. Kissimmee, Inc. (a retail store) begins business on January 1, 2015 with a $100,000 cash contribution from the owners. b. On January 1, 2015, Kissimmee hires five employees to manage and operate the business. c. On January...
JOHNSON & JOHNSON AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Dollars and Shares in Millions Except Per...
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PLEASE PUT SOLUTION IN THE SAME FORMAT AS THE IMAGE. THANK YOU! Exercise A-7 (Algo) Derivatives;...
PLEASE PUT SOLUTION IN THE SAME FORMAT AS THE IMAGE.
THANK YOU!
Exercise A-7 (Algo) Derivatives; fair value hedge-futures contract [LOA-2] Arlington Steel Company is a producer of raw steel and steel-related products. On January 3, 2022, Arlington enters into a firm commitment to purchase 10,000 tons of iron ore pellets from a supplier to satisfy spring production demands. The purchase is to be at a fixed price of $64 per ton on April 30, 2022. To protect against the...
Please write and paraphrase ‘ Advantages and Disadvantages of Swaps
contract method . (150 words )
Use information from Google source
Citations and references need
I shown simple with attach photo ( cannot copy)
Aab automa Head 2017, p. 12). (2) (a) Critical evaluation of method (A) Currency swaps Currency swaps are generally used to access a cheaper source of financing in the desired foreign currency without having to access foreign capital markets. A higher cost of debt for a...
Q:
Please
write ˜ Advantages and Disadvantages of Swaps contract method .
(150 words )
Note -
Use information from Google source
******
Citations and references need *****
I
shown simple with attach photo ( cannot copy)
Some apps could automatically update Heading 2 Tide ubde Emph. No Spacing Heading1 (2) (a) Critical evaluation of method (A)- Currency swaps Currency swaps are generally used to access a cheaper source of financing in the desired foreign currency without having to access...
here is the homework with questions in english. It is
due in one day, can I get this by today please?
*60% 22:16 + Homework.pdf @ : Guidelines: Your essays for the three questions must not exceed 1000 words (an average of 300 words per question). QUESTIONS 1. What is the most used form of money today? This evolution has made at the expense of what form of money and will be made in the future for the benefit of...
Can anyone answer the question and explain it thx alot
22. Jet engine manufacturing entails enormous economies of scale. Pratt & Whitney, a large U.S. jet engine producer, faces substantial competition from Rolls-Royce, the British engine manufacturer. What would be the BEST way for P&W to cope with a dollar that has recently appreciated by 50%? a) accelerate R&D spending and cost-cutting efforts b) shift some of its production abroad c) raise the foreign currency prices of its engines sold...
Use the following image to answer the question
QUESTION:
A cash payment for the purchase of inventory requires a credit
to inventory.
o True
o False
1. Use the template below to indicate how the following transactions affect the accrual-basis accounting equation: a. Kissimmee, Inc. (a retail store) begins business on January 1, 2015 with a $100,000 cash contribution from the owners. b. On January 1, 2015, Kissimmee hires five employees to manage and operate the business. c. On January...
JOHNSON & JOHNSON AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Dollars and Shares in Millions Except Per Share Amounts) (Note 1)* 2016 71,890 21,789 50.101 20,067 9.143 29 Sales to customers Cost of products sold Gross profit Selling, marketing and administrative expenses Research and development expense In-process research and development Interest income Interest expense, net of portion capitalized (Note 4) Other (income) expense, net Restructuring (Note 22) Eamings before provision for taxes on income Provision for taxes on income (Note 8)...
PLEASE PUT SOLUTION IN THE SAME FORMAT AS THE IMAGE.
THANK YOU!
Exercise A-7 (Algo) Derivatives; fair value hedge-futures contract [LOA-2] Arlington Steel Company is a producer of raw steel and steel-related products. On January 3, 2022, Arlington enters into a firm commitment to purchase 10,000 tons of iron ore pellets from a supplier to satisfy spring production demands. The purchase is to be at a fixed price of $64 per ton on April 30, 2022. To protect against the...
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