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Modern methods for hedging the market risk


  • MIHAILESCU Laurentiu

    () (The Bucharest Academy of Economic Studies, Romania)

  • POPA Gabriela

    () (The Bucharest Academy of Economic Studies, Romania)


The 2008 financial crisis is affecting millions of companies (from small ones up to big corporations) and is one of the hottest topics in all TV deadlines and step by step it starts to be part of our daily reality. The daily reality can be called as “Market instability”: The recent market instability was caused by many factors, chief among them a dramatic change in the ability to create new lines of credit, which dried up the flow of money and slowed new economic growth and the buying and selling of assets. The weapon against market instability is only one and can be defined in generic terms as “Hedge”. In finance, a hedge is a position established in one market in an attempt to offset exposure to the price risk of an equal but opposite obligation or position in another market — usually, but not always, in the context of one's commercial activity. The study presents a set of innovative hedging products that can be built based on the instruments traded by commercial banks allowing the customers to hedge efficiently the underlying risks of adverse movements of market parameters (especially FX rate and interest rates). These structures are also more accessible for customers in relationship with the commercial banks than the instruments traded across different stock exchanges.

Suggested Citation

  • MIHAILESCU Laurentiu & POPA Gabriela, 2009. "Modern methods for hedging the market risk," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 12(2 Special), pages 40-45, July.
  • Handle: RePEc:rom:econmn:v:12:y:2009:i:2special:p:40-45

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    References listed on IDEAS

    1. Florica BADEA & Eugen BURDUS, 2009. "Contributions on the Lean Management in the current evolution of a company," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 12(1), pages 168-179, June.
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    More about this item


    market risk; hedging; financial crisis; bank; options;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill


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