Definition of "Hedging"
Method of transferring risk to permit the risk bearer to assume two offsetting positions at the same time so that, regardless of the outcome of an event, the risk bearer is left in a no win/no lose position. For example, in the options market, a stock owner of an underlying stock can write calls or buy puts. In the same options market, the short sellers of the underlying stock can buy calls or write puts.
Popular Insurance Terms
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Modified guaranteed investment contract (GIC) in which the underlying assets of the synthetic contract are owned by the plan itself rather than the insurance company as is the case with the ...
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In property insurance, amount that an insured does not have to pay when a loss exceeds a predetermined sum; here the insurance company pays more than 100% of the loss, so that the ...
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