firm commitment hedging

This topic has 1 reply, 2 voices, and was last updated 8 years ago by P2-D2.

Viewing 2 posts - 1 through 2 (of 2 total)

Author

Posts
February 21, 2018 at 3:19 pm #438247
edit
Member
- Topics: 25
- Replies: 21
Dear Sir,

I can’t get my head around firm commitment hedging being fair value hedging. In my head if we have a firm commitment it means we will have future cash flow, thus it should be cash flow hedging.

Would you please put me right and give me some real life example?

thanks
February 21, 2018 at 9:35 pm #438281
P2-D2
Keymaster
- Topics: 4
- Replies: 7235
Hi,

Cash flow hedges are when we have a highly probable future cash flow, which is slightly different to a firm commitment as this is where the transaction is virtually certain to occur.

Thanks
Author

Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.