Market Risk Management
PGDBA Program

Overview

Market risk refers to the danger of misfortunes in the banks exchanging book because of changes in value costs, loan costs, credit spreads, outside trade rates, item costs, and different pointers whose esteems are set in an open market.

Chapter 1:  Understanding Market Risk on the Farm

1.0 Objectives of this Chapter

1.1 The Nature of Market Risk in Agriculture

1.2 Types of Market Risk

Barley - Corn - Canola - Soybean - Western Feedlots -

Eastern Feedlots - Hog Finishing

1.2.1 Price Risk

1.2.2 Gross Margin Risk

1.2.3 Cash Flow Risk

1.2.4 Financial Risk

1.3 Summary

Chapter 2: Futures Markets

2.0 Objectives of this Chapter

2.1 Development of Futures Markets

2.2 What is a Futures Market?

2.3 The Futures Contract

2.4 The Standardized Futures Contract

2.5 Forward versus Futures Contracts

2.6 Attributes of a Futures Contract

2.7 Long and Short

2.8 The Link Between Cash and Futures Contracts

2.8.1 Threat of Delivery

2.8.2 The Cash Settled Contract

2.9 The Margining Process

2.10 Closing out a Futures Position

2.11 The Mechanics of a Simple Hedge

2.12 Summary

2.Q Quiz

2.EX1 Short Hedge Exercises

2.EX2 Long Hedge Exercises

2.A Answers

 

Chapter 3:  Basis

3.0 Objectives of this Chapter

3.1 The Concept of Basis

3.2 Basis for Livestock

3.3 Basis for Grains and Oilseeds

3.3.1 Carrying Charge Markets

3.3.1.1 Inverted Markets

3.3.2 Transfer Costs

3.3.3 Basis and Threat of Delivery

3.4 Basis Variability

3.5 Calculating Basis

3.6 Basis Quotes - Adjusted and Unadjusted Basis

3.7 Summary

3.Q Quiz

3.EX1 Basis Exercise: Complete Historical Basis Table

3.A Answers

Chapter 4:  Options

4.0 Objectives of this Chapter

4.1 An Example from the Private Sector

4.2 Components of an Option on Futures

4.3 Exchange Traded Options on Futures

4.4 Option Rights and Obligations

4.5 Determination of Premium Value

4.5.1 Time Decay

4.6 Options Classifications

4.7 Closing Out an Option Position

4.8 How do Options Work?

4.9 Summary

4.Q Quiz

4.EX1 Options Exercise and Questions

4.A Answers

 

Chapter 5:  Hedging with Futures and Options

5.0 Objectives of this Chapter

5.1 Hedging with Futures and Options Markets

 

MARKET RISK MGNT

Chapter 6:  Managing Exchange Rate Risk

6.0 Objectives of this Chapter

6.1 Introduction

6.2 Exchange Rate and the Short Commodity Hedger

6.3 Canadian Exchange Rate Risk

6.3.1 Determining Your Canadian Dollar Hedge Requirement

 

 

 

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E: 405/2015-CO/L | M: 406/2015-CO/L

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