Test your knowledge 32

GetSetGo · March 6, 2009, 2:48am

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

Wa_Wa · March 6, 2009, 3:06am

B - - cross hedge uses 2 separate ccy’s (i think)

cfasf1 · March 6, 2009, 4:33am

agree with B.

tom18606 · March 6, 2009, 5:33am

C

pmoonoi · March 6, 2009, 3:08pm

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

maratikus · March 6, 2009, 5:02pm

C

pmoonoi · March 8, 2009, 6:46am

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)