Entity: HEDGING
Hedging is a strategy used to limit risks in investments or business activities by taking offsetting positions. It can also refer to avoiding giving direct answers or opinions.
HEDGING
Etymology
The term 'hedging' originates from the Old English word 'hecg', meaning a fence or boundary.
Definition
Hedging is a strategic practice of limiting risks by taking positions that offset potential losses or uncertainties. It can involve financial transactions or avoiding direct answers or opinions.
Historical Context
Hedging has been used for centuries in various forms, from agricultural practices to modern financial markets. It has evolved to become a crucial risk management tool.
Cultural Significance
In business and investing, hedging plays a vital role in managing uncertainties and protecting against adverse market movements. It is a widely accepted practice in the financial world.
Related Concepts
Hedging is closely related to risk management, derivatives trading, and portfolio diversification. It is also linked to the concept of speculation.
See Also
- Risk Management
- Derivatives Trading
- Portfolio Diversification
A strategic practice of limiting risks by taking positions that offset potential losses or uncertainties.