Hedged portfolio

Definition:

A portfolio consisting of a long position in the stock and a long position in the put option on the stock, so as to be riskless and produce a return that equals the risk-free interest rate.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Revaluation

An increase in the foreign exchange value of a currency that is pegged to other currencies or gold.

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