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Hedging - Coggle Diagram
Hedging
Foreign Exchange Risk
Types of Risk
Transaction
short term risk
Economic
Long term risk
Translation
Internal Techniques
Lag
Lead
Invoice in home currency
Netting
Forward
Money Market Hedge
Using interest rates
Future
Options
OTC
Traded
Swap
Netting/matching
Interest Rate Risk
Type of risk
Variable or fixed rates
Future loans or deposit
Internal techniques
Blance between fixed + variable
Matching assets + liabilities
Forward Rate Agreement
Interest Rate Guarantee
Futures
Traded Options
Correct Strike price
Caps, floor and clollars
Swaps
Set up
Buy or sell
Bank you will give you the worst rate
How many contracts
Are we buying or selling
Dates
Exercise Price
Do we need a basis?