HEDGING Definition

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HEDGING is strategy focused upon reducing exposure to risk of loss resulting from fluctuations in exchange rates, commodity prices, interest rates etc. Hedging in securities is taking two positions that will offset each other if prices change, thereby limiting financial risk.

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ECONOMIC EXPOSURE, in foreign exchange, is the extent to which the value of the firm, as measured by the present value of all expected future cash flows, will change when exchange rates change.

FINANCIAL STATEMENT ANALYSIS is analysis of a companys financial statement, usually by accountants or financial analysts. Usually includes indepth financial ratio analysis comparisons over time periods.

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