Finance pp 164-171 | Cite as


  • Gregory Connor
Part of the The New Palgrave book series (NPA)


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.


Pension Fund Future Contract Market Maker Portfolio Insurance Riskless Asset 
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© Palgrave Macmillan, a division of Macmillan Publishers Limited 1989

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  • Gregory Connor

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