Identifier: C6T6L3 | Revision: 2026-10-26 | Planned study: 10–15 minutes, excluding extended practice.

Decision and objectives

Decision: Select a feasible action only after both cash and loss constraints pass, and record the stress boundary and residual risk. Objectives: Write a reproducible comparison including a baseline; Apply cash and loss constraints; Set review triggers from residual risks. Prerequisite: C6T6L2.

All numerical offers, rates, prices, account chains, fees and contract parameters below are hypothetical, unless a primary document is expressly identified. They are not current executable offers or evidence that a Turkey-resident investor can access them. The assumed investor is a Turkey-resident individual outside a business, with no assumed US citizenship or tax residence; actual classification must be checked. Results are before actual tax unless a fictional tax schedule is explicitly supplied. No account, deposit or trade is required.

Mechanics

A final decision record states investor status, objective, amount, currency, spending date, loss budget, reserve rules and permitted tools. It compares feasible routes and a baseline, identifies the legal claim and provider, and preserves source and quote dates. Show the hedge inside the combined portfolio ledger rather than celebrating option profit alone. A justified rejection is a complete decision when the proposed implementation fails the objective; rejecting every instrument without analysis is not.

Price and return drivers

Use common dates and base currency. Separate contractual promises, synthetic scenarios, model values and executable quotes. Identify an observable review trigger: cost, available cash, exposure mismatch, permission or withdrawal change. A Greek or stress estimate is conditional, so state its boundary and residual risk. Assign responsibility and a calendar for any funding action. The record should explain which new evidence would change the choice.

Worked case

Synthetic committee starts with equity exposure TRY 200000 and cash 50000. The 50000 reserve must remain withdrawable throughout 90 days and fund the day-90 bill without selling risk assets. Equity loss budget is 30000. A matched European cash-settled put covers 2000 units bought at 100, strike 90, premium 4, total fees 200, zero funding. Premium plus fees 8200 leaves cash 41800, failing the reserve rule. At expiry prices 70, 100 and 120, equity-plus-put value is 180000, 200000 and 240000; after premium/cost, equity results are −28200, −8200 and +31800. The hedge meets its loss objective under these terms but is not funded compatibly with the reserve.

Adverse case

For the first rejected screen only, assume zero execution cost; adding costs cannot repair its loss breach. Alternative one sells 8200 equity and holds cash: equity 191800, cash 58200, but a 30% equity fall loses 57540, beyond budget. Alternative two reduces equity to 100000 with fixed execution cost 500: 30% loss 30000 plus cost gives 30500, slightly too much. Retaining 98000 instead gives 29400 market loss plus 500 cost = 29900; cash becomes 50000 + 102000 − 500 = 151500, meeting the reserve. This is a declared 30% stress boundary, not a guaranteed maximum for all market moves. A different shock or tax cost requires recalculation.

Practical use

Prepare an actual instruction only after permission, documents, quote size, custody and taxes are checked. Confirm sale proceeds are withdrawable by the reserve date. This artifact is a draft decision exercise, not an order. Keep the remaining exposure and review triggers in the same record. Include the quoted spread, commission, funding, custody, conversion and exit charges applicable to the actual route. Check investor residence/status, acquisition and income dates, effective tax rules and treaty scope before applying any actual tax; these cases remain before actual tax.

Decision boundaries

Select the final reduced exposure under the supplied stress and reserve constraints. Decline the initial put implementation because it consumes required cash, not because puts lack protection value. A separately documented cash source or lower premium could change the choice. Record worse drawdowns, currency, issuer and custody risks outside the declared scenario rather than claiming complete risk elimination.

Practice and references

Exercise: equity 120000, cash 60000, loss budget 25000 under a 25% fall, fixed execution cost 400. Solve 0.25 × retained equity + 400 ≤ 25000. Solution: maximum retained equity 98400; sell 21600, cash becomes 81200. Market loss 24600 plus cost 400 reaches 25000 and cash exceeds the 60000 reserve need. Worse scenarios and actual tax remain outside this boundary.

Takeaway: Select a feasible action only after both cash and loss constraints pass, and record the stress boundary and residual risk. References: product card, formula; glossary: Decision record; Review trigger; Stress boundary. Next: the completed curriculum and final school examination. Topic test.

Sources: GIB: Investment Income Guide (retrieved 2026-10-26; Introduction and foreign income/reporting framework). SEC: Exchange Traded Funds (retrieved 2026-10-26; Structure, price and NAV). CME: Benefits of Futures Margins (retrieved 2026-10-26; Initial, maintenance and broker requirements). Revision: 2026-10-26; recheck changeable rules before publication.

Shared reference guide | Class examination | Final examination