hedge

hedge definition - business

hedge

A transaction that reduces the risk on an already existing investment position. An example is the purchase of a put option in order to offset at least partially the potential losses from owned stock. Another example is the purchase of tangible assets such as diamonds or gold as a hedge against the possibility of inflation. See also perfect hedge, risk hedge, short hedge.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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