23.03.2023 - 07:38

What is the difference between a balance sheet hedge, a financing hedge, and a money market hedge?

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What is the difference between a balance sheet hedge, a financing hedge, and a money market hedge?

Answers (1)
  • Eliseo
    April 11, 2023 в 02:13
    A balance sheet hedge is a strategy used by companies to protect against changes in the value of assets and liabilities on their balance sheet, typically through the use of financial derivatives. A financing hedge is a strategy used by companies to protect against changes in the cost of borrowing, such as interest rates, by using financial derivatives to lock in a specific rate. A money market hedge is a strategy used by companies to protect against changes in foreign currency exchange rates by borrowing in one currency and investing in another currency at a higher rate. In summary, each type of hedge serves a specific purpose and helps companies manage risks associated with different areas of their operations, such as asset values, borrowing costs, and currency exchange rates.
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