A manager enters into a trade to deliver the original foreign currency he is expecting to get for a third currency, this is called … A. triangular trade B. Proxy hedge C. Cross hedge Cheers
B - - cross hedge uses 2 separate ccy’s (i think)
agree with B.
C
It got to me C man. For proxy hedge, enter into fwd contract betw domestic currency and a second FC For cross hedge, enter into fwd contract betw seond and third FC
C
pmoonoi Wrote: ------------------------------------------------------- > It got to me C man. > > For proxy hedge, enter into fwd contract betw > domestic currency and a second FC > > For cross hedge, enter into fwd contract betw > seond and third FC Sorry correction: Proxy hedge - Fwd contract betw Domestic currency vs 2nd FC (correlated w 1st FC) Cross hedge - Fwd contract betw 1st FC vs 3rd FC (not correlated w 1st FC but assume diff risk exposure)