The New Palgrave Dictionary of Economics

Living Edition
| Editors: Palgrave Macmillan

Hedging

  • Gregory Connor
Living reference work entry

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DOI: https://doi.org/10.1057/978-1-349-95121-5_1174-1
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Abstract

Hedging is the purchasing of an asset or portfolio of assets in order to insure against wealth fluctuations from other sources. A hedge portfolio is any asset or collection of assets purchased by one or more agents for hedging. A grain dealer may hedge against losses on an inventory of grain by selling grain futures; a Middle Eastern businessman may hedge against political turmoil (and the resulting losses) by buying gold; a pension fund may hedge against capital losses on its equity portfolio by buying stock index put options.

Keywords

Pension Fund Financial Asset Future Contract Market Maker Portfolio Insurance 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
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Copyright information

© The Author(s) 1987

Authors and Affiliations

  • Gregory Connor
    • 1
  1. 1.