Cover


 

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Cover

To use the forward market to protect against exchange risk. Typically, an importer with a future commitment to pay in foreign currency would buy it forward, and exporter with a future receipt would sell it forward, and a purchaser of a foreign bond would sell forward the expected proceeds at maturity. See hedge.

Cover

The purchase of a contract to offset a previously established short position.

Cover

The details of insurance provided by an insurance company to a policyholder.Sometimes cover is used as shorthand for 'dividend cover' - see separate definition of this term.



Similar Matches

Covered writer

Covered writer

An investor who writes options only on stock that he or she owns, so that option positions may be collected.


Interest cover

Interest cover

Interest cover measures the amount of interest paid by a company on its borrowings against its operating profit in the same period.The ratio shows the impact of gearing on a company's profit and loss account. If the figure is low, a small reduction in operating profits, or a rise in the cost of borrowing, can wipe out pre-tax profits. To calculate interest cover, divide the operating profits by the interest paid.Example: a company which has profits of £4m and which pays net interest of £1m, has interest cover of 4.


Coverage ratios

Coverage ratios

Ratios used to test the adequacy of cash flows generated through earnings for purposes of meeting debt and lease obligations, including the interest coverage ratio and the fixed-charge coverage ratio.


Covered combination

Covered combination

A strategy in which one call and one put with the same expiration, but different strike prices, are written against each 100 shares of the underlying stock. Example: writing 1 XYZ Jun 50 call and 1 XYZ Jun 55 put, and buying 100 shares of XYZ stock. In actuality, this is not a fully 'covered' strategy because assignment on the short put would require purchase of additional stock.


Covered Straddle

Covered Straddle

An option strategy in which one call and one put with the same strike price and expiration are written against 100 shares of the underlying stock. In actually, this is not a "covered" strategy because asignment on the short put would require purchase of stock on margin. This method is also know as a covered combination.


Further Suggestions

Forward cover
Modified Accelerated Cost Recovery System (MACRS)
Asset coverage test
extended coverage
European Recovery Program
Guaranteed replacement cost coverage insurance
Recovery
covered writing
Cost Recovery Period
Covered or hedge option strategies
critical illness cover
Price discovery process
Cash flow coverage ratio
Adequacy of coverage
Covered Straddle Write
Accelerated cost recovery system (ACRS)
Covered interest parity
Rally (recovery)
Covered interest arbitrage
covered warrant
Uncovered options
Initiate coverage
Covered option
Uncovered call writing
Coverage initiated


 
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