Can somebody tell me what is a hedge funding, in simple words please?

Question

Can somebody tell me what is a hedge funding, in simple words please?

Answer 1

Hedging is done to reduce the risk involved in the underlying investment.  This can be done in various ways - by investing in a different instrument itself - or by investing in  the contradicting trend for the same instrument .  Basically this avoids investments from suffering great losses.

Answer 2

Locking in a profit position on a given product or commodity, by buying options and/or futures that protect the other side of the trade.  The "spread" is locked in.

Answer 3

A hedge is an investment that is taken out specifically to reduce or cancel out the risk in another investment. Hedging is a strategy designed to minimize exposure to an unwanted business risk, while still allowing the business to profit from an investment activity. Hedging is protecting an investment from long-term changes in the market. The various hedging strategies, taken by both private and corporate traders, yield good profits at a minimum risk by neutralizing the market's volatility. Companies, for example, usually perform hedging, when they purchase a product from a foreign company, and the payment for it will only be transferred at a later stage. These companies use various kinds of hedging techniques in order to maintain the value of the currency, since a rise means loss.

there are various kinds of hedging like:

1. Hedging credit risk

2. Hedging currency risk

3. Hedging equity & equity futures

4. Futures hedging

Answer 4

A hedge fund is a private, unregulated pool of cash  who's managers can invest as they see fit, and charge a performance fee and a management fee. Usually only open to qualified investors..IE by invitation only, or only those with large portfolios.

Answer 5

HEDGING MEANS TRY TO REDUSE RISK. ITS HELPS TO REDUSE RISK BUT ITS NOT SURE TO REDUSE RISK B'COZ WHOLE GAMES ARE DEPENDS UPON MARKET .SOMETIMES OUR ASSUME WILL BE WRONG ALSO ?