Question

What is actual hedge and perfect hedge for investor

Answer 1

Answer:

The actual age of a property is its chronological age. Effective age refers to the state of the property. For example, a property with an actual age of 10 years may have an effective age of 20 years if upkeep and maintenance have not been performed.

A perfect hedge is a position undertaken by an investor that would eliminate the risk of an existing position, or a position that eliminates all market risk from a portfolio. In order to be a perfect hedge, a position would need to have a 100% inverse correlation to the initial position.

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Answer 2

A hedge is an investment that is made with the intention of reducing the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security.

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