hedging
Definition
Risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities. In effect, hedging is a transfer of risk without buying insurance policies. It employs various techniques but, basically, involves taking equal and opposite positions in two different markets (such as cash and futures markets). Hedging is used also in protecting one's capital against effects of inflation through investing in high-yield financial instruments (bonds, notes, shares), real estate, or precious metals.
hedging is in the Commodities & Precious Metals Trading, Currency Trading, Disaster Planning & Risk Management, Investing and Securities & Futures Trading subjects.
hedging appears in the definitions of the following terms:
degree day swap,
derivative security,
systemic risk,
bundle,
cross-hedging,
retention of risk,
against actuals,
futures market,
forward market,
forward procurement
and
hedging appears in the other term: double hedging
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