Module 5 · Chapter 15

The File in One Sheet

The trades are over. This chapter adds up the hedge's cost, shows why it is not a loss, and hands over the file for the next hedge.

≈ 14 min read 8-question test

In this chapter

  • How to add up what a hedge cost, and why the total is not a loss
  • Which negotiated points mattered when the swap ended early
  • The checks, diary and file a junior keeps on every hedge

15.1The file in one paragraph

Atlas fixed most of its loan's interest with a swap and bought a cap for the rest. Rates then fell, Atlas refinanced, and the bank ended the swap early. Atlas paid the close-out sum, and the file closed with only the cap still running (Hedge Sheet 9). This chapter adds up the cost, answers the board's question about it, and sets out what you keep for the next hedge.

Key point

A hedge is judged on the decision to take it, not on which way rates went afterwards.

Also in this chapter

  1. What the hedge cost, in six lines
  2. Why the total is not a loss
  3. The path that did not happen
  4. The negotiated points that paid
  5. What a board should see before the next hedge
  6. Ten questions to ask of any Confirmation
  7. The diary
  8. Three checklists
  9. The handover bundle
  10. Five sentences for a board
  11. Your job

Preview

The rest of this chapter opens with a free account. Every edition is free to read until 31 January. Open a free account by the end of that day and keep every edition published by then, for good. Open it from the edition home →