Hello Readers, 

Welcome to the SCN Series. 

Today’s Term is: Hedge

A hedge is an investment that protects your finances from a risky situation.

It is done to reduce the risk of adverse price movements (rise or fall) in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a future contract. 

In simpler words, It is like making an alternate investment in 2nd security so as to reduce the adverse effect of price movements in 1st security. 

*A perfect hedge (100%) eliminates all risk in a portfolio.

Click here for the previous posts of this series.

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