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Here is a list of common financial terms. Click on the letter that corresponds with the first letter of the financial term to get the definition.
Hedging
An investment strategy of lowering risk by buying securities that have offsetting risk characteristics. A perfect hedge eliminates risk entirely. Hedging strategies lower return since there is a cost involved in hedging. For example, a portfolio manager could short a futures contract which will perfectly offset any decrease in the value of the portfolio. Options and short selling stock can also be used for hedging. Hedge funds are investment pools that are free to use any hedging techniques they desire and they often make large bets in a relatively small number of different holdings. Hidden Asset
An asset that is omitted or understated in the balance sheet of a company. Discovering hidden assets before the market does can lead to appreciable price gains for savvy investors. High Flyer
A highly speculative stock with a rising price and high volatility which makes it vulnerable to dramatic crashes. Holding
All the shares (mutual funds & stocks), contracts (options), or face amount (bonds) you own of an investment. Hybrid Investment
An investment which has the major characteristics of two or more other investments. For example, a convertible preferred stock generally pays a steady dividend and has steady principal like a high quality corporate bond, but it can be converted into common stock. Hybrids can be complicated to understand and are best left to sophisticated investors.
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