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Q: what is "over-hedging "?

Category: glossary , Asked by: E. Nguyen from Canada

A: A hedged position in which the offsetting position is for a greater amount than the underlying position held by the firm entering into the hedge. While hedging ensures price certainty, over-hedging can in effect become partly a hedge and partly a speculative investment and can unduly hurt a firm. The over-hedged position essentially locks in a price for more goods, commodities or securities than is required to protect the position held by the firm. For example, if a firm entered into a January futures contract to sell 25,000 mm Btu at $6.50/mm Btu but the firm had only an inventory of 15,000 mm Btu that they're trying to hedge, but due to the size of the futures contract the firm now has excess futures contracts that amount to 10,000 mm Btu, this would be a speculative investment. Visit MoneyForex

    do you know what "cash cost" is?

    Category: glossary by G. V. From Provo, United States

    a "cash cost " is A cash basis accounting cost recognition process that classifies costs as they are paid for in cash, and is recognized in the general ledger at the point of sale. This method is contrary to the accrual cost recognition method, which directly influences the operating cash flow figure. Cash costs are costs that businesses pay for when using cash, or a check, but not credit. On a cash accounting basis, the costs paid for by using credit would not be recorded in the general ledger until the actual cash has been paid. This is the main reason why firms moved away from the cash accounting method to the accrual method, as the accrual method will recognize credit transactions as well as cash transactions.

    please define the "annual general meeting"

    Category: glossary by K. Howell from United Kingdom

    the "annual general meeting " is A mandatory yearly meeting of shareholders that allows stakeholders to stay informed and involved with company decisions and workings. This yearly meeting is the single event whereby shareholders are able to gather and ask the board of directors questions pertaining to corporate health and strategy. Proper notice must be given to shareholders with regards to meeting times and agenda.

    do you know what a "1%/10 net 30" is?

    Category: glossary by A. P. From Middlesbrough, United Kingdom

    the "1%/10 net 30" is A way of providing cash discounts on purchases. It means that if the bill is paid within 10 days, there is a 1% discount. Otherwise, the total amount is due within 30 days. For example, if "$1000 1/10 net 30" is written on a bill, the buyer can take a 1% discount ($1000 x.01 = $10) and make a payment of $990 within 10 days, or pay the entire $1000 within 30 days. Manufacturers offer discounts like this to encourage retailers to pay quickly. This calculation is the same regardless of what discount is used. For example "2/10 net 30" just means there is a 2% discount.

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    please tell me what a "currency fixings" is
    Some currencies have a daily point where the currency is fixed for reference purposes. In a market that trades around the clock it is useful to have a commonly agreed point for use in, for example, legal contracts. Visit Forex Trading USA

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