Hedging: A Very Common Term in Stocks Market, Get More Knowledge with Finance Assignment Help

Hedge is financial term and generally used in shares and stock markets. Hedge is defined as an investment position planned to balance potential losses that may be incurred by a complimentary or other investment of same type. In common language, Hedge or Hedging Technique is used to reduce or balance any substantial losses suffered by a person or an organization.
A hedge can be build from various types of financial instruments including stocks, insurance, forward contracts, exchange-traded funds, and options, swaps, and futures contracts.
Public futures markets were established in the 19th century to allow clear, standardized, and well-organized hedging of agricultural commodity prices but now they have expanded to include futures contracts for hedging the values of energy, , foreign currency, precious metals etc.
Example of Hedging
Agricultural commodity price hedging
Farmer sells wheat futures contract for the anticipated crop size for a certain fixed price. Now farmer hedges his exposure to risk of wheat prices. He is not concerned with prices for wheat will rise or fall because he hedges this risk with futures contract of wheat.
Hedging strategies
Various strategies of hedging include:
 Forward exchange contract
 Currency future contracts
 Money Market Operations
 Future contracts for interest
This is a long list of hedging strategies, grouped by different categories.
Risks that can be balance through the Hedging
There are varying types of risk that can be secluded with a hedge.
 Commodity risk
 Credit risk
 Currency risk
 Interest rate risk
 Equity risk
 Volatility risk
 Volumetric risk
Financial concepts and terms are used in daily life of an individual or mostly for a student. Finance is the blood in any business. Students generally find finance assignments difficult and hence leave the assignments. But now you can go for finance assignment help available online for support of students. This is the best option available for the students to get well-versed with the concepts and basics of subject.



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s