Series 52: 4.1.4.4. Hedging

Taken from our Series 52 Top Off Online Guide

 4.1.4.4.  Hedging

Unlike position trading, hedging strategies are made not to increase income but to reduce risk. More specifically, a hedge is an investment made in order to reduce the risk of an adverse price movement in a security by taking an offsetting position in a related security. A common way of hedging the interest rate risk of a municipal bond is to short a Treasury bond. To short a security means to sell something

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