Select Page

Interpretation

Interpretation From the summary of results in Table, it can be seen clearly that the hedging approach is the most risky while the conservative approach is the least risky. The trade stands midway; less risky than the hedging approach but more risky than the...

Risk Considerations

Risk Considerations The two approaches can also be contrasted on the basis of the risk involved. Hedging Approach The hedging approach is more risky in comparison to the conservative approach. There are two reasons for this. First, there is, as already observed, no...

Conservative Approach

Conservative Approach This approach suggests that the estimated requirement of total funds should be met from long term sources, the use of short term funds should be restricted to only emergency situations or there is an unexpected outflow of funds. In the case of...