Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Hedging Using Commodity Futures
Producers of agricultural commodities are faced with price risk and production risk over a period of time and within a marketing year. In case of agricultural commodities, price risk can occur for a number of reasons like drought, floods, uncertain rainfall, natural calamities, near record production, increase in demand, decrease in international prices, etc. One way of reducing this risk is through the commodity futures exchange markets. Agricultural producers can use commodity futures to hedge the potential costs of commodity price volatility.
Hedging in the futures market involves a two-step process. Depending upon the hedger's cash market position, he will either buy or sell futures initially. For example, a firm which owns or plans to purchase or produce a cash commodity will sell futures to hedge this cash position. A long hedge involves a firm purchasing futures to protect itself against a price increase in a commodity prior to purchasing it in either the spot or forward market. In the second stage, once the cash market transaction materializes, the futures position is no longer required and hence the hedger will close his futures position, i.e., if he has gone long on a contract, he will sell it. Alternatively, if he has initially sold a futures contract, he will buy one. It should be noted that both the opening and closing positions must be for the same commodity, same number of contracts and delivery month.
Q. Degree of uncertainty in predicting cash balances? Probability approaches identify a degree of uncertainty in predicting cash balances and allow for a range of outcomes to
Different bonds trade at different yields though the coupon rate, maturity, and embedded options are same for them. Assuming that all the other bond characteristi
#question how to collect real irr %..
Callable bonds give the right to the issuer to redeem the bond prior to its maturity date, at a specified call price. These bonds are beneficial to the
a) Define monetary policy, and discuss the operation of monetary policy in the United States post-GFC.
Preferably all customers will settle within the agreed terms of trade. If this doesn't happen a company needs to have in place agreed procedures for dealing with overdue accounts.
what is the rand corporation five project rank
As the early 1980s, foreign portfolio investors have purchased an important portion of U.S. treasury bond issues. Discuss the short-term and long-term influences of foreigners’ por
Since the operations in the money market are dominated by institutional players, the retail investor's participation in the market seems to be limited. To overcom
Pension Fund Management: A Global Perspective Pension funds are known worldwide more for their social security element. They have assumed more importance from the day the priva
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd