Question

What is hadging? How does it differ from speculation.

Answer 1

HEY MATE THIS IS YOUR ANSWER

Speculation involves trying to make a profit from a security's price change, whereas hedging attempts to reduce the amount of risk, or volatility, associated with a security's price change. Hedging involves taking an offsetting position in a derivative in order to balance any gains and losses to the underlying asset

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Answer 2

Hedging

Hedging involves taking an offsetting position in a derivative in order to balance any gains and losses to the underlying asset.

Differences between Hedging & Speculation

Speculation involves trying to make a profit from a security's price change, whereas hedging attempts to reduce the amount of risk, or volatility, associated with a security's price change.