»Ê¹ÚÌåÓýapp

What is hedging?

Companies will often try and mitigate the risks that could impact upon the company’s core business. »Ê¹ÚÌåÓýapp company will often enter into financial instruments which will be structured to minimise these risks.

In particular:

• »Ê¹ÚÌåÓýapp hedged item is the asset, liability or future transaction whose risk is being mitigated.
• »Ê¹ÚÌåÓýapp hedging instrument is the instrument used to mitigate the risk associated with the hedged item.
• A hedging relationship is where a company has a hedging instrument to mitigate the hedged item.