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Perfect Hedge
(redirected from Perfect Hedges)

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Perfect hedge
A situation in which the profit and loss from the underlying asset and the hedge position are equal.
Perfect Hedge
A hedge on an investment that eliminates the risk on another investment entirely. Perfect hedges are fairly rare as most investments carry at least a little unique risk that cannot be hedged. However, an example of a perfect hedge is a position on option that completely offsets a position in the underlying asset. While perfect hedges eliminate risk, they also greatly reduce or sometimes eliminate the potential for a return.
perfect hedge
A hedge that exactly offsets any gains or losses from an existing investment position. An example of a perfect hedge is the short sale of an owned security in order to lock in an existing profit and transfer it to a subsequent tax year. Because very few hedges are perfect, most of them operate merely to offset a portion of losses or gains. See also risk hedge.
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OTC derivatives can have the big advantage of being perfect hedges that minimize hedge accounting problems, Wallace notes, but the Financial Accounting Standards Board will be coming out with new rules for hedge accounting and may well require effectiveness testing for all hedges, with no shortcut for perfect hedges done with OTC derivatives, as the International Accounting Standards Board already does.
Rock solid on OTC derivatives regs: companies have staked their ... by Gamble, Richard / Treasury & Risk
We strive to get perfect hedges and at the moment we are right in the middle of our busiest time for hedgecutting.
Gardening: week in erddig by Daily Post (Liverpool, England)
The whole garden is walled by perfect hedges of Yew topped at intervals by topiary lollipop spheres of the Yew.
Week in erddig; Glyn Smith is National Trust head gardener at Erddig ... by Daily Post (Liverpool, England)
 
 
 
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