What is a quanto forward?
What is a quanto forward?
Essentially, a quanto has an embedded currency forward with a variable notional amount. It is that variable notional amount that give quantos their name—”quanto” is short for “quantity adjusting option”. Quanto options have both the strike price and underlier denominated in the foreign currency.
What are quanto options?
The Quanto option is a cash-settled, cross-currency derivative in which the underlying asset has a payoff in one country, but the payoff is converted to another currency in which the option is settled.
What are quanto futures?
Quanto Futures are cash settled Derivatives in which the underlying traded product is denominated in a foreign currency that is settled in another domestic currency at a fixed exchange rate.
What is a compo option?
As a quanto option, a compo option is also an option denominated in a currency other than the currency in which the underlying asset is traded. Unlike quanto option, the holder of a compo option has exposure to the FX rate. In a compo option, the payout and the strike are fixed in the compo’s currency.
What is FX Quanto?
A quantity-adjusting option, also known as a Quanto option, is a cash-settled, cross-currency derivative, where the underlying asset is denominated in a currency other than the currency in which the option is settled. Another name for these options is a guaranteed exchange rate option.
What is a quanto equity swap?
A quanto equity swap is a security-based swap if (i) the purpose of the transaction is to transfer exposure to the return of a security or security index without transferring exposure to any currency or exchange rate risk and (ii) any exchange rate or currency risk exposure incurred by the dealer is incidental to the …
What is a compo swap?
A compo equity swap is an equity swap, in which an investor is exposed to both changes in the value of foreign stock and in the related foreign currency (i.e., a compo swap is financially equivalent to a direct foreign stock investment that is executed in the form of an equity swap).
What is an exchange option?
An exchange-traded option is a standardized contract to either buy (using a call option), or sell (using a put option) a set quantity of a specific financial product, on, or before, a pre-determined date for a pre-determined price (the strike price).
What is a leveraged swap?
A swap agreement usually embedded in a structured note or similar instrument, in which the swap payments are expressed relative to a multiple of a notional amount, usually the face or principal amount of the underlying structured note or a multiple of a rate spread.
What is forward FX?
Summary. An FX forward is a contractual agreement between the client and the bank, or a non-bank provider, to exchange a pair of currencies at a set rate on a future date.
What is foreign exchange ratio?
A (foreign) exchange rate is the rate at which one currency is exchanged for another. Thus, an exchange rate can be regarded as the price of one currency in terms of another. An exchange rate is a ratio between two monies. If 5 UK pounds or 5 US dollars buy Indian goods worth Rs.
