what do you mean by hedging
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A risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities. In effect, hedging is a transfer of risk without buying insurance policies.
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Answer:Hedging is an action taken to mitigate fluctuations in prices.
Explanation:The best examples are markets in future,where a gain on futures may offset a loss incurred by a change of price,or vice versa.
An investor can hedge against inflation by purchasing equities,instead of putting all his money in gilt-edged stocks,since,other thingrs being equal,a general fall in the value of money will be offset by a rise in the money value of equities(ordinary shares).
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