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- An investment made to reduce the risk of adverse price movements of another asset.
- hedge fund
- An investment pool that uses advanced investment strategies that are not generally permitted for traditional mutual funds. Examples include various types of derivatives.
- A strategy sometimes used to offset a perceived investment risk. For example, an investor might “short” a stock when he or she believes the price of the stock will decline. By selling a stock short the investor is banking that the price will fall so he or she borrows shares, sells them short, and if the price does fall he or she buys them back at a cheaper price, returns them to their owner and the difference is that investor’s profit.
- high yield investment program (HYIP)
- An investment that promises high rates of return but is a scam. It is a type of Ponzi scheme where returns are paid with money invested by new investors.