Speculation And Hedging
Speculation And Hedging
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In our eReader you can find the full English version of the book. Read Speculation And Hedging Online - link to read the book on full screen. Our eReader also allows you to upload and read Pdf, Txt, ePub and fb2 books. In the Mini eReder on the page below you can quickly view all pages of the book - Read Book Speculation And Hedging
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We have also shown that, as expected, the spot price is positively correlated with the basis. Under these conditions, the more distant is the maturity of the futures contract relative to the ■ 22- expected duration of inventory holding, the more of any expected increase in spot prices will be reflected in changes in the basis and the greater will be the variance of changes in the basis. As a result of this, hedgers can take a more or less aggressive policy with regard to price expectations depe...nding on their confidence about their expectations. While the uncondit- ional variance of the basis with respect to distant futures is greater than with respect to near futures, an increased confidence in the expectation of a price rise may reduce the conditional variance of the distant basis to a level low enough to make it more attractive than the safer hedge.
Putting it another way, every hedger can choose among a series of possible hedges yielding larger prospective gain at the expense of greater risk.
What to read after Speculation And Hedging?
You can find similar books in the "Read Also" column, or choose other free books by Paul H Cootner to read onlineMoreLess
To quickly assess the difficulty of the text, read a short excerpt:
We have also shown that, as expected, the spot price is positively correlated with the basis. Under these conditions, the more distant is the maturity of the futures contract relative to the ■ 22- expected duration of inventory holding, the more of any expected increase in spot prices will be reflected in changes in the basis and the greater will be the variance of changes in the basis. As a result of this, hedgers can take a more or less aggressive policy with regard to price expectations depe...nding on their confidence about their expectations. While the uncondit- ional variance of the basis with respect to distant futures is greater than with respect to near futures, an increased confidence in the expectation of a price rise may reduce the conditional variance of the distant basis to a level low enough to make it more attractive than the safer hedge.
Putting it another way, every hedger can choose among a series of possible hedges yielding larger prospective gain at the expense of greater risk.
What to read after Speculation And Hedging?
You can find similar books in the "Read Also" column, or choose other free books by Paul H Cootner to read onlineMoreLess
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