GAMMA FRM-I

Topic 26 - Hedging Strategies using Futures

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April 24, 2012

AIM 26.1 AIM 26.1 Define and differentiate between short and long hedges and identify appropriate uses.

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Short Hedge & Long Hedge P 19 21, NCFM Equity Derivative

( to be discussed in session )

< Kaplan explained in too concise form >

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The next few slides talk about Long Hedge and Short Hedge taken from Core Material, Hull

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 Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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 Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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 Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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 Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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AIM 26.2
AIM 26.2 Describe the arguments for and against hedging and the potential impact of hedging on firm profitability. - not an imp. AIM - can go thru Kaplan, AIM 26.2

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AIM 26.3 & 26.4 AIM 26.3 & AIM 26.4 Define the basis and the various sources of basis risk, and explain how basis risks arise when hedging with futures.

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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Net selling price in case of short hedge and Net buying price in case of long hedge To be explained in session

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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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<< some additional points related to Basis Risk pl. go thru AIM 26.4, 26.5 ( p-32, 33 ) Kaplan >>

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AIM 26.5 & 26.6 AIM 26.5 & AIM 26.6 Define cross hedging, and compute and interpret the minimum variance hedge ratio and hedge effectiveness

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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Hedge ratio .. cont.

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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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AIM 26.7 AIM 26.7 Define, compute, and interpret the optimal number of futures contracts needed to hedge an exposure, including a tailing the hedge adjustment.

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 Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Tailing the Hedge

When futures are used for hedging, a small adjustment, known as tailing the hedge can be made to allow the impact of daily settlement. Thus, optimal no. of futures contracts N* = h* VA / VF where VA is the dollar value of position being hedged and VF is

the dollar value of 1 future contract ( the futures price times Q F ) Suppose in Example 3.3, the spot and futures price are 1.94 and 1.99 dollars per gallon, then VA = 2,000,000 x 1.94 = 3,880,000 while VF = 42,000 x 1.99 = 83,580, so optimal no. of contracts = 0.78 x 3,880,000 / 83,550 - 44 rather than 37 = 36.22 = 36
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AIM 26.8 AIM 26.8 Demonstrate how to use stock index futures contracts to change a stock portfolios beta. Very Imp. Topic Pl. go thru sec. 3.5 Stock Index futures of Hull ( Hedging an Equity Portfolio, Changing the Beta of Portfolio ) Shall have Q&A / discussion on this in next session
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Some Q&A solving would be taken up in next sessions

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AIM 26.9 AIM 26.9 Describe what is meant by rolling the hedge forward and discuss some of the risks that arise from such a strategy.

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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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Rolling the hedge forward contd.

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Rolling the hedge forward contd.

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Rolling the hedge forward contd. In the above example, the oil price declined from $19 to $16. Had we not hedged, a loss of $3. Bcos of hedging, we could limit the loss to $3 - $1.7 = $1.3

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Salient Features
Who can be nominated / enroll ? the associates of various accounts of BFS3 and other IB-related groups whom the GL nominates for the competency development in Derivatives those associates who have already certifications in Derivatives ( e.g NCFM ) or have real interest in this area and are interested to know a bit more deeply from finance point of view and aspiring for Derivatives-based techno-functional / functional role / SME those who are targeting for Risk Management roles and planning for FRM exam, CFA exam those who were interested to go thru the Hull book to increase their competency level but could not find time to do so What is the Program Methodology ? Instructor-led-training thru webex / Video-Conf. to associates of BFS3 spread across various locations White-board facility of webex will be used to make the associates understand the conceptual parts Though webex based, yet the sessions will be interactive and in participatory mode e.g knowledge sharing, questioning to faculty and participants, tutorials discussion Faculty - Subrato Das ( Exe. MBA ( Finance ), IIM Calcutta; Domain Consultant, Capital Market & FS Solutions BFS3 ISU; had worked in Derivatives-based project in techno-functional role in Morgan Stanley a/c )
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