Meaning of hedge

This query is : Resolved

Rakesh (Querist)
Follow

27 July 2011 Dear All,

Can anyone explain me the meaning of Hedge in the simple language followed by a simple example.

Also please do let me know who can do the hedging & what exact benefit will the person will get?

Please reply me quick
Thanks your your help

CA Amit Joshi

CA Amit Joshi (Expert)
Follow

27 July 2011 Hedging means minimizing the risk. If there is probability of loss and when we protect our self from the risk than it is called hedging.
for ex we are wearing helmet to protect our self from the risk of damage which can be happened from a accident, that is hedging.
Normally this word is used in share market to protect our self from the increase and decrease in the market.

Rakesh

Rakesh (Querist)
Follow

27 July 2011 Thanks amit for your valuable feedback. would appreciate if you can more elaborate your statement in the term of understanding more on hedging term. Also would like to know what is Hedge funds

Thanks
Rakesh

Upgrade to CAclubindia Pro. Subscribe Now!