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A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, gambles, [1] many types of over-the-counter and derivative products, and futures contracts.
Collateral management is the method of granting, verifying, and giving advice on collateral transactions in order to reduce credit risk in unsecured financial transactions. The fundamental idea of collateral management is very simple, that is cash or securities are passed from one counterparty to another as security for a credit exposure. [ 9 ]
The business model of an investment bank differs from a hedge fund in several ways but perhaps the most important is this: The business model of a hedge fund is to make investments and profit off ...
A hedge fund is a pooled investment fund that holds liquid assets and that makes use of complex trading and risk management techniques to aim to improve investment performance and insulate returns from market risk.
Hedging is an investment strategy that is simple in concept but that can be difficult in execution. The primary uses of hedging strategies are to either lock in a profit or to protect against a...
Asset and liability management (often abbreviated ALM) is the term covering tools and techniques used by a bank or other corporate to minimise exposure to market risk and liquidity risk through holding the optimum combination of assets and liabilities. [1]
Fund administration is the name given to the execution of back office activities including fund accounting, financial reporting, net asset value calculation, capital calls, distributions, investor communications and other functions carried out in support of an investment fund, which may take the form of a traditional mutual fund, a hedge fund, a private equity fund, a venture capital fund, a ...
A major task of the XVA-desk, therefore, [4] [24] is to hedge [13] this exposure; see Financial risk management § Banking. This is achieved by buying, for example, credit default swaps : this "CDS protection" applies in that its value is driven, also, by the counterparty's credit worthiness .