1) Companies often incorrectly hedge cash flows with uncertain timing using options by assuming the critical terms match between the exposure and hedge.
2) To properly hedge cash flows with uncertain timing using options, companies should assess effectiveness based only on the intrinsic value of the exposure and hedge using spot rates, and expense the time value changes to earnings each period.
3) When hedging cash flows with uncertain timing within a specified period, companies should document the exposure as occurring within that period rather than on a specific date, assess effectiveness without assuming critical terms match, and measure effectiveness using intrinsic values at spot rates.
Case study of a comprehensive risk analysis for an asset managerGateway Partners
The following case study is an excerpt of a comprehensive risk analysis prepared for an asset manager client of Gateway Partners. This client is a medium-sized asset manager with offices in both the U.S. and abroad who needed assistance in both quantifying and fully understanding the risk profile of their multi-billion dollar portfolio. Additional risk concerns of this client include “worst case” risk scenario analysis and the use of derivative instruments to assist in the hedging of their portfolio. While this case study has been used with the permission of our client, specific securities and the amounts they represent in the client portfolio have been changed and reduced to protect the identity of the client. Gateway Partners is proud to present this case study as an example of the risk management services we provide to our clients.
Case study of a comprehensive risk analysis for an asset managerGateway Partners
The following case study is an excerpt of a comprehensive risk analysis prepared for an asset manager client of Gateway Partners. This client is a medium-sized asset manager with offices in both the U.S. and abroad who needed assistance in both quantifying and fully understanding the risk profile of their multi-billion dollar portfolio. Additional risk concerns of this client include “worst case” risk scenario analysis and the use of derivative instruments to assist in the hedging of their portfolio. While this case study has been used with the permission of our client, specific securities and the amounts they represent in the client portfolio have been changed and reduced to protect the identity of the client. Gateway Partners is proud to present this case study as an example of the risk management services we provide to our clients.
Options contract on indian derivative marketRitesh Sethi
This PPT is helpful for the student who is doing MBA in finance extreme.
it is just small help from my side in future also i will be uploading these type of PPT'S.
Thank You
Ritesh Sethi
Options contract on indian derivative marketRitesh Sethi
This PPT is helpful for the student who is doing MBA in finance extreme.
it is just small help from my side in future also i will be uploading these type of PPT'S.
Thank You
Ritesh Sethi
Exchanges are centralized places where certain securities, commodities, derivatives, and other financial instruments are traded. In order to facilitate trading among buyers and sellers of these products, exchanges take the central position of being the counterparty to both buyers and the sellers of the product. This is done to remove the possibility of disputes that may arise from the non-performance of the counterparty. The exchange guarantees trades will be honored. This creates credit risk for the exchange attributable to the buyers and the sellers of its products. To address the potential loss due to the credit risk undertaken by exchanges from these buyers and sellers of the exchange traded products, exchanges demand certain margin requirements from their counterparties.
This presentation addresses in detail the issues that are considered for calculation of margin requirements and maintenance.
The more I understand IFRS17, the more I realize how vital it is to have a comprehensive Enterprise Risk (ERM) Regime in place as half of IFRS17 Compliance is already met by insurers with robust ERM Regimes in place that already tackles the key quantitative and qualitative risks facing the insurer. I've been working intensively on ERM since 2013 and while ERM was adopted due to pressure from regional regulators and best practices, still I feel that risk regime in many insurers is just kept to fill the stomach of the file cabinets and not taken as an active part of management decision making. Hence, it is good to see ERM gain in importance due to IFRS17 compliance with a deadline arriving soon in 1.25 years as at 1st Jan 2023.
In this 73 slides presentation we briefly describe 1) pricing how it is done in an insurance company and its various risks 2) ERM 3) Risk Registers 4) capital modeling 5) stress testing 6) reverse stress testing 7) cat and pandemic modeling 9) tangential reference to health insurance given as application 10) structural understanding of market cycles and so on.
The Financial Accounting Standards Board (FASB) released its long-awaited improvements to ASC Topic 815, Derivatives and Hedging in late August. The hedging project began as a significant overhaul to hedge accounting as proposed in 2008 and 2010 Exposure Drafts. However, upon reactivating the hedging project, the FASB determined such broad based changes were not necessary; rather, several targeted improvements could achieve the objectives.
These amendments, provided in Accounting Standards Update (ASU) 2017-12, are designed to address concerns expressed by preparers and users of financial statements regarding difficulties in applying hedge accounting as well as the clarity with which hedging activities are presented in the financial statements.
IFRS 13 CVA DVA FVA and the Implications for Hedge Accounting - By Quantifi a...Quantifi
International Financial Reporting Standard 13: fair value measurement (IFRS 13) was originally issued in May 2011 and applies to annual periods beginning on or after 1 January 2013. IFRS 13 provides a framework for determining fair value, clarifies the factors to be considered for estimating fair value and identifies key principles for estimating fair value. IFRS 13 facilitates preparers to apply, and users to better understand, the fair value measurements in financial statements, therefore helping improve consistency in the application of fair value measurement.
ASU 2014-03 was issued on January 16, 2014, and its provisions may be elected by entities that are not public business entities, not-for-profit entities, employee benefit plans or financial institutions. Through the early adoption provision entities may elect to use the simplified hedging method on qualifying interest rate swaps as soon as their December 31, 2013 financial statements, for calendar year companies, as long as those financial statements have not been made available for issuance prior to January 16, 2014.
The third quarter was all about hedging and complex financial instruments. Two accounting standards updates will simplify accounting for entities and the users of their financial statements.
In this issue we will further explore the intricacies of Step 1: Identifying the contract(s) with a customer. Normally, a business knows who its customers are and can identify its contracts, however, the specific requirements of Topic 606 contain some challenges that will require judgment and documentation around these conclusions.
The application of Topic 606 and each step requires the use of judgment and provides opportunities for multiple approaches. The following discussion is broken down into a systematic framework for applying the guidance that we believe to be helpful whenever Step 1 is applied. This framework consists of three parts:
1. Determine if a contract exists
2. Determine if the contract is with a customer
3. Evaluate the five criteria in Step 1 to determine if the contract is a contract with a customer in the scope of Topic 606 (a “revenue contract”).
Some critical issues does pop up while the issue of accounting treatment of Future Warranty Claims comes. In fact here the Financial reporting in India is undergoing a drastic transformation owing to the adoption of Indian Accounting Standards (Ind AS) that are converged with IFRSs. Thus
the key issues on Recognition, Measurement and Disclosure requirements for various items are undergoing significant changes in recent past. In the light of above it is important to consider the change in recognition, measurement and disclosure requirements in respect of provisions
carried in the books with respect to warranties offered by Companies.
We are happy to share 3rd Issue of our magazine Ingenious.
It contains
1. Artticle on solvency Margin by Gopinath sir in the section called progression.
2. List of AWF Qualifiers
3. Did you know by Indepal Singh Bindra
4. Data Centre latest economic data and small savings scheme rates
5. RBI launches e - Rupee by Geeta Mohan. P
6. Trade Infra in India by Bharathi Srinivasan
7. Rise & Fall of Crypto Exchange FTX by Savita Pillai
8. Role & Importance of professional insurance advisor Part 2 by Ankur Shah
9. Last RBI MPC meet statement
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