Dual Focus: Hedging Programs Need to Focus on Both Sides of the Income Statement
To frame the issue, we start with an appreciation that virtually all companies are in a spread business, where profit (i.e., the spread) equ
Hedging with Off-Market Swaps
While this minor disparity in the effective fixed rate, ex post, relative to its ex ante anticipated fixed rate would likely justify the ass
Derivatives' Valuations: Assessing Alternative Methodologies
The idea of valuing a derivative is reasonably straightforward, but the devil is in the details. The first concern is the notion of fair val
Designing A Proper Hedge: Theory Versus Practice
The article challenges conventional wisdom as to the form of the regression. Specifically, the traditional text book solution performs a reg
Hedging the Hedge: How Treasurers Can Decide How Much to Hedge
The benefit of derivatives shouldn’t be measured by the profit that they generate, but the possible trouble that they can avoid.
Implementing a Hedging Program: Building a Dashboard
With varying degrees of precision depending on the circumstances, futures, forwards and swaps serve to “lock in” prices that would otherwise