Rp Research Paper Example | Topics and Well Written Essays - 250 words

Rp - Research Paper ExampleEffectiveness or ineffectiveness of hedging can be metric using either the Dollar Offset or Regression Analysis methods. A highly effective hedge relationship falls within the veto 80%-125% range. A risk hedging with a resultant cumulative dollar offset percentage above 80% indicates that the hedging has been effective (Catlere 18-20). On the dollar offset, a performance be economic crisis 80% indicates ineffectiveness of the hedging. A person may wish to hedge his products by selling them a month earlier to the predicted start of lower prices. With a better price predicted to follow the time of low prices, the businessman goes ahead and futures the hedged products at their current low prices to resell later at the expected higher price (Catlere 46). An ineffective hedging will take place when one sells his products at the current prices preempting the threatening fall of prices, but instead the prices rise. The hedged products will experience a loss as compared to the situation where they were not hedged (Rheinlander 54-5).Swap rates or interest rates swap is the floating rate that one counterparty pays on the basis of the agreed-upon index while the other pays a permanent rate for the wholly period of the contract (McFetridge 36).Sources university of California Medical Center Pooled Revenue Bonds, 2007 series A, B, and C, Official Statements University of California Annual Financial Report, 2010-2011 University of California general Revenue Bonds, 2011 serial publication Y, Z, and AA, Official