Investment Glossary

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Hedge

a security transaction that reduces the risk on an already existing investment position. An example is the purchase of a put option in order to offset at least partially the potential losses from owned shares, currency, commodity or other asset in which there is price fluctuation. While hedges reduce potential losses, they are not costless and tend to reduce potential profits. Futures and forward currency contracts can also be used to effect a hedge.

High-technology share

the share of a company involved in sophisticated technology such as electronics, computer software, robotics, life sciences etc. High-technology shares often offer large potential gains but tend to be volatile.

Holding company

a company that exists primarily to exercise control over other firms. The control is exercised through ownership of a majority of the controlled firm's shares. Earnings of the holding company are derived from earnings of the controlled firms.

Hot money

funds controlled by investors seeking high short-term yields and are likely to be reinvested somewhere else at any time.

Hybrid security

a security with features characteristic of two or more other securities. A convertible note, for example is a hybrid security in that it has the features (interest, maturity and principal) of an ordinary bond; however, it is heavily influenced by the price movements of the share into which it is convertible.

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