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Suppose that a bond portfolio with duration of 12 years is hedged using a futures contract where the underlying asset has duration of 4 What is likely to be implication on the hedge ratio and the hedg?
Wiki User
∙ 14y ago
Suppose that a bond portfolio with duration of 12 years is hedged using a futures contract where the underlying asset has duration of 4 What is likely to be implication on the hedge ratio and the hedging strategy of the fact that 12 years rate is less volatile than the four years rate?
Wiki User
∙ 14y ago
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Is it contract's duration or contracts's duration?
contract's duration
Difference between put option and call option?
The holder/purchaser/owner of a call option contract has the right to buy an asset (or call the asset away) from a writer/seller of a call option contract at the pre-determined contract or strike price. The holder/purchaser/owner of a call option contract expects the price of the underlying asset to rise during the term or duration of the call contract, for as the value of the underlying asset increases so does the value of the call option contract. Conversely, the write/seller of a call option contract expects the price of the underlying asset to remain stable or to decline. The holder/purchaser/owner of a put option contract has the right to sell an asset (or put the asset) to a writer/seller of a put option contract at the pre-determined contract or strike price. The holder/purchaser/owner of a put option contract expects the price of the underlying asset to decline during the term or duration of the put contract, for as the value of the underlying asset declines the contract value increases. Conversely, the writer/seller of a put option contract expects the price of the underlying asset to remain stable or to rise.
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