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How is Jet Fuel hedged with futures?
Jet fuel can be hedged with over-the-counter instruments like options and swaps or with exchange-traded futures such as futures on crude or heating oil. These contracts are based an underlying commodity which is not jet fuel. Therefore, it is not a perfect hedge. In the U.S., there is no futures contract on kerosene, the primary component of jet fuel.
What is an example of a derivative product?
Derivative instruments are classified as: Forward Contracts Futures Contracts Options Swaps
What has the author Keith C Brown written?
Keith C. Brown has written: 'Hobbes' 'Interest rate and currency swaps' -- subject(s): Currency swaps, Interest rate futures
What is types of derivatives?
The common derivatives in the market are futures contracts, options and swaps. A futures contract is a contract between two or more parties to trade a certain asset at a specified date in the future at the price agreed on today. Swaps are contracts to exchange cash on or before a certain future date. Cash is exchanged based on the underlying value of commodities, stocks, exchange rates or other such assets Options give the owner the right but not the obligation to buy or sell an asset. The sale takes place at a certain price called the strike price. This price is specified when the parties enter into the contract. This contract will also specify a maturity date. There are five major classes of underlying assets. These are interest rate derivatives, foreign exchange derivatives, credit, equity and commodity derivatives.
When to use Eurodollar Futures and not Interest Rate Swaps for interest rate risk?
They are basically the same. A swap is like a sequential series of ED futures. There is a minor difference in that the ED futures have no convexity, while the swap does. In most cases, to the end user, this is relatively inconsequential.
Compare optionsfuturesswaps and fowards?
Options, futures, swaps, and forwards are all financial derivatives used for hedging or speculation. Options provide the right, but not the obligation, to buy or sell an asset at a predetermined price, while futures and forwards obligate parties to buy or sell an asset at a set price on a future date. Swaps involve exchanging cash flows or financial instruments between parties, often to manage interest rate or currency risks. Unlike forwards, which are customizable and traded over-the-counter, futures are standardized and traded on exchanges, providing greater liquidity.
How is translation exposure mitigated?
To minimise the risk of translation of foreign assets or liabilities, Futures Contracts could be undertaken. Such as Swaps OR through Hedging
What is the difference between currency swaps and cross currency swaps?
http://en.wikipedia.org/wiki/Currency_swap
What is the difference between swaps and marshes?
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What is realized and unrealized swap?
Realized swaps refer to the actual gains or losses that occur when a swap contract is settled or terminated, reflecting the cash flows exchanged between parties. Unrealized swaps, on the other hand, represent the potential gains or losses that exist on paper due to changes in market conditions, but have not yet been settled or realized through a transaction. Essentially, realized swaps impact current financial statements, while unrealized swaps may affect future financial positions.
What has the author Mary S Schaeffer written?
Mary S. Schaeffer has written: 'A/P Department Benchmarks and Analysis 2003' 'Understanding interest rate swaps' -- subject(s): Swaps (Finance), Interest rate futures, Interest rate swaps 'Essentials of Credit, Collections, and Accounts Receivable' 'Travel and Entertainment Best Practices' -- subject(s): OverDrive, Business, Nonfiction 'Essentials of Accounts Payable'
How many categories are there of Derivative instruments?
There are many ways to 'categorise'. The most basic form has 2 categories; 1) Forwards (including swaps and futures) 2) Options A Derivative is a financial product that is derived out of the value of an underlying asset. Derivatives are very popular and are widely used financial instruments. Derivative products can be classified into the following main types: 1. Forwards 2. Futures 3. Options 4. Swaps 5. Warrants 6. Leaps & 7. Baskets
