Hector at 23:42, 21 June 2017

2017-06-21T23:42:38Z

Hector: Created page with "== Firm Involved == * Metallgesellschaft == Year of the event == 1993 == Description of the case == Metallgesellschaft used long term hedging instruments to hedge short-term..."

2017-06-21T23:40:52Z

Created page with "== Firm Involved == * Metallgesellschaft == Year of the event == 1993 == Description of the case == Metallgesellschaft used long term hedging instruments to hedge short-term..."

New page

== Firm Involved ==
* Metallgesellschaft

== Year of the event ==
1993

== Description of the case ==
Metallgesellschaft used long term hedging instruments to hedge short-term (but recurring) risk. The strategy is neutral economically, but margin calls from the short term leg caused a huge outflow of cash and large accounting losses.

== Take-aways ==
Match the cash flows when designing a hedging strategy: being economically hedged is not necessarily sufficient. One must also take into account accounting aspects, as some positions need to be netted, some Marked to market and some others not, which can result in large losses

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	== Take-aways ==		== Take-aways ==
−	Match the cash flows when designing a hedging strategy: being economically hedged is not necessarily sufficient. One must ~~also~~ take into account accounting aspects, as some positions need to be netted, some Marked to market and some others not, which can result in large losses	+	* Match the cash flows when designing a hedging strategy: being economically hedged is not necessarily sufficient.
		+	* One must take into account accounting aspects during the hedging process, as some positions need to be netted, some Marked to market and some others not, which can result in large losses.

Matching cash flows and the importance of accounting - Revision history

Hector at 23:42, 21 June 2017

Hector: Created page with "== Firm Involved == * Metallgesellschaft == Year of the event == 1993 == Description of the case == Metallgesellschaft used long term hedging instruments to hedge short-term..."