hedge

(1) Verb- To reduce risk or behavior that reduces risk from future price movements.
(2) Noun - A transaction undertaken to reduce risk by offsetting the risk in another transaction. The risk in one position is hedged by counterbalancing it with the risk in another transaction. The values of each position must change inversely and with a high degree of correlation. Hedges may be cash to cash in which a position in a cash instrument such as a loan or investment reduces or offsets the risk in another cash position such as a deposit. For example, a $1,000,000 investment in a U.S. Treasury bond maturing in 10 years and a $1,000,000 certificate of deposit are largely (but not completely) offsetting risks. Hedges may also be cash to futures or futures to futures. American Banker Glossary
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A transaction that reduces the risk of an investment. Bloomberg Financial Dictionary
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The purchase or sale of a futures contract as a temporary substitute for a cash market transaction to be made at a later date. Usually involves simultaneous, opposite positions in the cash market and futures market. Chicago Mercantile Exchange Glossary
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A futures or options transaction motivated by the wish to reduce risk.
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The purchase or sale of options or futures contracts as a temporary substitute for a transaction to be made at a later date. Usually it involves opposite positions in the cash or futures or options market. Exchange Handbook Glossary
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A hedge is typically accomplished by making approximately offsetting transactions that will largely eliminate one or more types of risk. Hedging Investors can use derivatives and covered warrants to hedge investments. For instance, if an investor owns a particular stock, he or she can neutralize the impact of an impending fall in price by buying a put option, selling futures or buying a put warrant. London Stock Exchange Glossary

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I. hedge hedge 1 [hedʒ] noun [countable] FINANCE
something that gives you protection against a financial risk, for example futures (= agreements to buy or sell currencies etc on a fixed date in the future at a fixed price) or option S (= rights to buy or sell currencies etc at a particular price within a particular period of time or on a particular date in the future):

• They decided that diesel fuel for the company's trucks would rise by at least 10 cents a gallon, and have done some forward buying as a hedge.

hedge against

• Investors often buy precious metals as a hedge against inflation.

  [m0] II. hedge hedge 2 verb [intransitive, transitive]
1. FINANCE if you hedge a financial risk, you protect yourself against it, for example with futures (= agreements to buy or sell currencies etc on a fixed date in the future at a fixed price) or option S (= rights to buy or sell currencies etc at a particular price within a particular period of time or on a particular date in the future):

• I've never hedged currencies before. But I could see the dollar was getting lower, and I hedged for the first time, betting that the dollar would rise.

• Northwest Airlines saved more than $7 million in fuel costs because it hedged 4.2 million gallons of its fuel purchases for each month by buying futures contracts.

— hedging noun [uncountable] :

• Manufacturers have been doing more hedging because they expect prices for copper to rise.

• sophisticated currency hedging techniques

2. hedge your bets to reduce your chances of failure or loss by having several choices available to you:

• Promoters, uncertain whether losing weight was going to stay popular, hedged their bets by advertising that their products could help you add weight or reduce it.

hedge against something phrasal verb [transitive] FINANCE
if you hedge against, or hedge yourself against, a financial risk, you protect yourself against it by hedging:

• Consumers of a raw material can hedge against price movements through the futures markets.

• Many companies have not hedged themselves against a rising yen.

• Although invested in Europe, they weren't sufficiently hedged against currency changes.

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Ⅰ.
hedge UK US /hedʒ/ noun [C] FINANCE, STOCK MARKET
an investment made in order to reduce the risk of losing money on shares, bonds, etc. that you own, for example, by buying futures (= agreements to sell shares for a particular price at a date in the future) or options (= the rights to buy or sell shares for a particular price within a particular time period): »

These formulas are devised to tell the bank what kind of hedges to purchase to provide the best possible protection of its assets.

a hedge against sth »

In recent years, investors have also bought gold as a hedge against US dollar weakness.

»

inflation hedges

See also CURRENCY HEDGE(Cf. ↑currency hedge)
Ⅱ.
hedge UK US /hedʒ/ verb [I or T]
FINANCE, STOCK MARKET to reduce the risk of losing money on shares, bonds, etc. that you own, for example by buying futures (= agreements to sell shares for a particular price at a date in the future) or options (= the rights to buy or sell shares for a particular price within a particular time period): »

European airports have been attracting investors keen to hedge long-term pension liabilities.

»

We don't tend to hedge at all - in either stock or bond funds.

hedge against sth »

Companies can hedge against currency movements, but many choose not to.

hedge risk/exposure »

Airbus has hedged enough of its dollar exposure that a major short-term impact is unlikely.

hedge your bets — Cf. hedge your bets

Financial and business terms. 2012.

Synonyms:

Look at other dictionaries:

  • Hedge — Hedge, n. [OE. hegge, AS. hecg; akin to haga an inclosure, E. haw, AS. hege hedge, E. haybote, D. hegge, OHG. hegga, G. hecke. [root]12. See {Haw} a hedge.] A thicket of bushes, usually thorn bushes; especially, such a thicket planted as a fence… …   The Collaborative International Dictionary of English

  • Hedge — Hedge, v. t. [imp. & p. p. {Hedged}; p. pr. & vb. n. {Hedging}.] 1. To inclose or separate with a hedge; to fence with a thickly set line or thicket of shrubs or small trees; as, to hedge a field or garden. [1913 Webster] 2. To obstruct, as a… …   The Collaborative International Dictionary of English

  • Hedge — Hedge, v. i. 1. To shelter one s self from danger, risk, duty, responsibility, etc., as if by hiding in or behind a hedge; to skulk; to slink; to shirk obligations. [1913 Webster] I myself sometimes, leaving the fear of God on the left hand and… …   The Collaborative International Dictionary of English

  • Hedge — may refer to:*Hedge (barrier) or hedgerow, line of closely spaced shrubs planted to act as a barrier *Hedge (finance), investment made to limit loss *Hedge (linguistics), intentionally non committal or ambiguous sentence fragmentsee also*Hedgerow …   Wikipedia

  • Hedge — bezeichnet: das Hedgegeschäft im Finanzbereich eine adverbiale oder adjektivische Wendung, genannt Heckenausdruck Ian Charleson Hedge (* 1928), schottischer Botaniker Thomas Hedge (1844–1920), US amerikanischer Politiker Siehe auch:… …   Deutsch Wikipedia

  • hedge — / hej/ vi hedged, hedg·ing: to reduce possible losses in speculative transactions by engaging in offsetting transactions (as futures trading) Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. hedge …   Law dictionary

  • hedge — [hej] n. [ME hegge < OE hecg, akin to Ger hecke < IE base * kagh , wickerwork, wickerwork pen > ON heggr, L caulae, sheepfold: basic sense “woven fence, enclosure”] 1. a row of closely planted shrubs, bushes, or trees forming a boundary… …   English World dictionary

  • hedge — ► NOUN 1) a fence or boundary formed by closely growing bushes or shrubs. 2) a contract entered into or asset held as a protection against possible financial loss. 3) a word or phrase used to allow for additional possibilities or to avoid over… …   English terms dictionary

  • hedge — [n] boundary, obstacle, especially one made of plants barrier, bush, enclosure, fence, guard, hedgerow, hurdle, protection, quickset, screen, shrubbery, thicket, windbreak; concepts 429,470 hedge [v1] avoid, dodge beat around the bush*, be… …   New thesaurus

  • Hedge — (spr. Hedsch), Frederick Henry, geb. 1805 zu Cambridge im Staate Massachusetts, ging 1818 mit George Bancroft nach Deutschland u. besuchte seit 1821 Schulpforte, kehrte 1823 nach Amerika zurück, studirte auf der Harvard Universität in Cambridge,… …   Pierer's Universal-Lexikon

  • hedge in — index circumscribe (surround by boundary), envelop, occlude, restrict Burton s Legal Thesaurus. William C. Burton. 2006 …   Law dictionary

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