Filter by Categories
Accounting
Banking

Derivatives




Neutral Hedge


A hedge that involves taking positions in a group of instruments in an attempt to earn a riskless return on funds invested, regardless of the individual performances of the positions’ components. In other words, a neutral hedge can be established by combining market risk-offsetting positions in related instruments and other types of instruments in such a way that the investment will generate a risk-free interest rate when the underlying price moves in either direction.

This hedge neutralizes the risks of individual components.



ABC
Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
Watch on Youtube
Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments


    Leave Your Comment

    Your email address will not be published.*