--%>

Hedgers and Speculators

Explain hedgers and speculators are two types of economic agents required for a derivatives market to function.

E

Expert

Verified

Speculators and Hedgers are two types of market participants which are necessary for the operation of derivatives market.  Speculator attempts to profit from change in the futures price.  For doing this, speculator will take a short or long position in futures contract which depends on his expectations of future price movement.  Whereas, a hedger wishes to provide the price variation by locking in the purchase price of underlying asset through a long position in the futures contract or the sales price through a short position.  In effect, hedger passes off the risk of price variation to the speculator who is able, or at least more eager, to bear this risk.

   Related Questions in Financial Accounting

  • Q : Creativity and the Individual What are

    What are the various aspects of Creativity on an individual in the creative industry ?    

  • Q : Prepare the journal entry to record the

    On December 31, 20x1, the Kat Co. purchase a group of four assets for a total cost of $1,000,000. An independent appraiser assesses the fair value of each asset asfollows: Asset Fair Value Land $350,000 Building 600,000 Equipment 200,000 Fixtures 150,000 Prepare the journal entry t

  • Q : Accounting Required parts are clearly

    Required parts are clearly describes at the end of the questions and additional resource contains the journal article related to question three.. Approx 2000 word assignment.. First Question is of not more than 1000 words to make memorandum and its example is given at end of assignment and require

  • Q : Liability and Assets What are Liability

    What are Liability and Assets in Accounting equation. Also describe it with the help of formula.

  • Q : Define uniform cost manual Give a brief

    Give a brief introduction of the term ‘uniform cost manual’. And also write down its different contents?

  • Q : Computing opportunity cost of producing

    Country C is able to generate seven pounds of food or four yards of textiles per unit of input. Calculate the opportunity cost of producing food rather than textiles.  Also, compute the opportunity cost of producing textiles rather than food.

  • Q : Foreign entity’s functional and parent

    Specify some of instances under FASB 52 that foreign entity’s functional currency would be same as the parent firm’s currency.

  • Q : Portfolio of Sharemarket SHAREMARKET

     SHAREMARKET ASSIGNMENT SHEET  - Select a share portfolio consisting of one company from each group listed above. The total value of your portfolio should add up to

  • Q : Case study of gene expression analysis

    The paper by Golub et al. that was the focus of the second part of the BioConductor practical was the first analysis of its kind, demonstrating that gene expression analysis could potentially be used to classify leukaemia sub-types. Since its publication in 1999 there