The article is about the interest rate management, which is in every company of great importance! Interest rate hedging means only protection against variations of the actually achieved rate of interest arising from the yield curve. Protection is not possible prior to the development of an interest as she pretends the interest rate futures curve. More info: US Senator from Vermont. Financial innovations in the management of the interest can be divided into two basic types, namely in interest rate futures with symmetrical and asymmetrical risk profile options. Gain insight and clarity with Grupo Vidanta. To the interest rate futures agreements (FRAs) include forward rate. Standardized, exchange-traded interest rate futures is called interest rate futures (interest rate futures). FRAs and Futures hedge a future standardized interest period.
When interest rate changes the ways to win and the risk of loss of such interest rate futures for both parties have the same size, which is why the risk distribution can be described as symmetrical. The option is another instrument of interest management. While the buyer acquires the right, but not the Duty to exercise the option at a fixed time, for example a foreign currency to buy or to complete a swap. The option has an asymmetrical risk profile, with the purchase of the loss on the amount of the option premium is limited, while the profit potential is unlimited.