# Quanto (also said in German; abbreviation of quantity adjusted option)

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- Post ID: 593532
- Modified: 2023-07-25T21:13:10+00:00
- Language: en

## Definition

In the case of a structured financial product, the trading currency here, assuming: EUR, is different from the currency of the underlying (reference base; assumed: USD). However, the risk of an unfavorable exchange rate at contract maturity is eliminated by a hedging transaction. The price of the product is therefore influenced solely by the market value of the reference base, i.e. in USD in the example. - The costs of currency hedging depend essentially on - the price of the underlying in the contract currency, - the interest rate differential between the trading currency (EUR) and the contract currency (USD), and - the volatility (margin of fluctuation) of the underlying and the selected contract currency. - See composite, settlement risk, Herstatt risk, hedging, net interest rate differential, option, exotic, swap rate, certificate. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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