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What is the difference between hedging speculation and arbitrage?

By IndianMoney , 1 year ago

Speculation: Trading process based on assumptions, risk and probability of loss is high. Arbitrage: Involves purchase of security from one market and selling it in another market, at a higher price. It involves a limited amount of risk. Hedging: Investment process to minimize the risk, in case the underlying asset lose it's value. In case of loss, it is limited to a pre determined amount.

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