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The Use of Derivatives to Hedge Market Risk in Corporate Financing

Sánchez-Verdasco, Javier - 2018

In this tutorial article, the strategies available to hedge market risks arising from different financing instruments are explained. Financial derivatives, whether futures or options have been widely applied in companies to mitigate or eliminate potential losses due to the uncertainty in...

Persistent link: https://www.econbiz.de/10012913055

The Cobb-Douglas Function : Simple Derivations and How Students Might Accept Strange Dimensional-Properties

Koch, Matthias - 2013

The Cobb Douglas production function is a central element in economic growth theory and Microeconomics. Its popularity …

Persistent link: https://www.econbiz.de/10013081065

A Simple Way to Teach the Derivation of Aggregate Demand

Quinn, Kevin; Hoag, John - 2005

In this paper, we present a simplified macroeconomic model where money demand does not depend on the level of income. We then derive aggregate demand in a simple four quadrant diagram similar to a standard IS-LM. The analysis is extended to a model including net exports. The standard economic...

Persistent link: https://www.econbiz.de/10014063081

Hedging price risk when real wealth matters

Adam-Müller, Axel F. A. - 1999

Persistent link: https://www.econbiz.de/10001387124

Hedging price risk when real wealth matters

Adam-Müller, Axel F. A. - 1999 - This version: May 25, 1999

This paper analyzes optimal hedging of a tradable risk (e.g. price risk or exchange rate risk) with forward contracts in the presence of untradable inflation risk. Utility is defined over real wealth. Optimal forward positions are derived relative to a given initial exposure in the tradable...

Persistent link: https://www.econbiz.de/10011543537

Hedging the standard of living via cost of living index futures

Schulz, Rainer - 2000

People dislike inflation because inflation erodes the real value of future nominal income and wealth. Adjustment of future nominal values via a cost of living index is an appropriate way to handle the problem of real income risk. Nonetheless an important aspect needs more discussion: If markets...

Persistent link: https://www.econbiz.de/10009612030

An Intuitive Understanding of the Black-Scholes Formulas

Chen, Jing - 2010

Black-Scholes formulas for European call and put options are the core of the option theory. However, Black … Black-Scholes formulas. This intuitive understanding makes the option theory more accessible to many people …

Persistent link: https://www.econbiz.de/10013137807

Breakthrough in Understanding Derivatives and Option Based Hedging - Marginal and Joint Probability Density Functions of Vanilla Options - True Value-at-Risk and Option Based Hedging Strategies

Izmailov, Alexander - 2015

reliably characterize any random variable (in our case derivative) with just its first moment. • This lack of attention to …

Persistent link: https://www.econbiz.de/10013032725

A Case-based Introduction to Bank Accounting for Derivatives

Fischer, Dov - 2015

proceed to find derivative assets and liabilities on the balance sheet (we need to do some digging to find the balance … from credit derivatives. We summarize by showing the off-balance sheet derivative assets represent 88% of total assets …, while off-balance sheet derivative liabilities represent 103% of reported total liabilities …

Persistent link: https://www.econbiz.de/10013033932

Recent Developments in Derivatives Markets

Dew, James Kurt - 2016

Persistent link: https://www.econbiz.de/10012989914