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risk hedge

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Financial Dictionary

risk hedge

The taking of an offsetting position in related assets so as to profit from relative price movements. For example, an investor might purchase futures contracts on gold and sell futures contracts on silver in the belief that gold will become relatively more valuable compared with silver over the life of the contracts.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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