Term
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Definition
Normal V shape
Long Stock
2 Long Puts
or Short Stock
and 2 long calls |
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Definition
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Term
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Definition
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Term
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Definition
Long Call
Short Stock
"Lions Prefer Short Suits for Long Claws" |
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Term
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Definition
Long Stock
Long Put
"Lions Carry Long Socks for Long Paws" |
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Term
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Definition
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Term
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Definition
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Term
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Definition
| risk that arises because exchange rate changes may alter the value of future revenues/costs |
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Term
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Definition
| risk associated with a contractual payment of foreign currency |
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Term
| natural hedging vs contractual hedging |
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Definition
natural: using currency cash flows borrowed at domestic interest rates and invested at foreign interest rates
contractual: using financial contracts, i.e a forward |
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Term
| Risk Profiles: Importer vs. Exporter |
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Definition
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Term
| Natural Hedge Movements of Money: Importer & Exporter |
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Definition
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Term
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Definition
| Costless collars can be established to fully protect existing long stock positions with little or no cost since the premium paid for the protective puts is offset by the premiums received for writing the covered calls. |
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Term
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Definition
| Costless collars can be established to fully protect existing long stock positions with little or no cost since the premium paid for the protective puts is offset by the premiums received for writing the covered calls. |
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Term
| International Fisher Effects |
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Definition
| Real rate of return must be constant across all countries |
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