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Hedging Transaction: What It Is and How It Works Key takeaways * A hedging transaction is a tactical action used to reduce the risk of loss or shortfall while pursuing an investment or business objective. * Hedging commonly uses derivatives (options, futures, forwards) or inversely correlated assets to offset exposure. * Hedges carry costs (premiums…

Tender in Finance: Definition, How It Works, and Examples What is a tender? A tender broadly refers to: – An invitation—typically by a government or large institution—for suppliers or contractors to submit bids for a project, supply contract, or service. – The acceptance or submission of an offer in financial markets, such as shareholders submitting…

Hedge Ratio The hedge ratio measures how much of an investment is protected by a hedge relative to the total position. It is used to quantify exposure management for assets, currencies, commodities, or other positions where an offsetting instrument — such as futures or options — is used to reduce risk. What the hedge ratio…

Understanding Hedge Fund Managers: Roles, Strategies, and Pay What is a hedge fund manager? A hedge fund manager is an individual or firm responsible for running a hedge fund: setting investment strategy, making trading and allocation decisions, managing operations, and raising capital. Hedge funds are typically limited partnerships that pursue above-average returns through actively managed,…

Hedge Fund: Definition, Examples, Types, and Strategies Key takeaways A hedge fund is a privately managed investment pool that uses active, often complex strategies to seek above-average returns. Hedge funds commonly accept only accredited investors and impose high minimums and lock-up periods. They employ leverage, derivatives, and alternative assets, and typically charge a “2 and…

Hedge Clause A hedge clause is a disclaimer inserted into research reports, press releases, investment advisory agreements, and other financial publications to limit the issuer’s liability for errors, omissions, or forward-looking statements. Common examples include “safe harbor” notices in corporate releases and standard disclaimers in analyst reports. Why it matters Hedge clauses shape how readers…

Key Takeaways * Hedge accounting aligns recognition of gains and losses on hedging instruments with the timing of the underlying hedged risk, reducing income-statement volatility. * ASC 815 (FASB) defines three hedge types: fair value hedges, cash flow hedges, and net investment hedges. * Hedge accounting is optional, can simplify reported results, but may obscure…

Hedge: Definition and How It Works in Investing A hedge is an investment position taken to reduce the risk of adverse price movements in an asset. It typically involves taking an offsetting or opposite position in a related security so that losses in the primary position are reduced (or gains curtailed). How hedging works Think…

Heckscher-Ohlin Model Definition The Heckscher-Ohlin (H–O) model is an economic theory of international trade that explains how countries specialize and trade based on factor endowments. It predicts that a country will export goods that intensively use the factors of production it has in relative abundance (e.g., labor, capital, land) and import goods that intensively use…

Heavy Industry: Considerations for Large-Scale Businesses What is heavy industry? Heavy industry refers to businesses that undertake large-scale production requiring substantial capital, extensive facilities, and heavy equipment. Typical characteristics include high barriers to entry, low product transportability, and sizable environmental impact (pollution, deforestation, etc.). Historically associated with iron, steel, shipbuilding, mining, and bulk energy production,…

Heatmap: Definition, How It Works, Uses, and Best Practices What is a heatmap? A heatmap is a two-dimensional visual representation of data that uses color to indicate value or intensity. Each cell, area, or pixel is colored according to a scale (legend), making spatial or matrix patterns—hotspots and gradients—immediately visible. How heatmaps work Data values…

Heath-Jarrow-Morton (HJM) Model Overview The Heath-Jarrow-Morton (HJM) framework models the evolution of the entire forward interest rate curve. Instead of modeling a single short rate, HJM specifies dynamics for the instantaneous forward rate f(t, T) for every maturity T, which permits consistent pricing of interest-rate–sensitive securities (bonds, swaps, caps/floors, swaptions) and derivatives under a risk‑neutral…

Heating Degree Day (HDD): Definition and How to Calculate What is an HDD? A Heating Degree Day (HDD) quantifies how much (in degrees) and for how long the outdoor temperature is below a base temperature—commonly 65°F (18°C). HDDs are used to estimate heating demand: the colder the weather relative to the base, the higher the…

What Is the Healthcare Sector? The healthcare sector comprises the industries that deliver medical services, manufacture drugs and medical devices, and provide health insurance. It is a major part of the U.S. economy and a significant driver of research, employment, and public policy. Key Takeaways * The U.S. healthcare sector accounted for about 18% of…

What Is a Health Care Power of Attorney (HCPOA)? A Health Care Power of Attorney (HCPOA) is a legal document that designates a specific person to make medical decisions on your behalf if you become unable to communicate or make those decisions yourself. The term HCPOA can refer both to the document and to the…

Health Savings Account (HSA) What is an HSA? A Health Savings Account (HSA) is a tax-advantaged account for people covered by a qualified high-deductible health plan (HDHP). Contributions (from you or your employer) are invested tax-free and can be withdrawn tax-free for qualified medical expenses. Balances roll over year to year and the account is…

Health Reimbursement Arrangement (HRA) What is an HRA? A Health Reimbursement Arrangement (HRA) is an employer-funded benefit that reimburses employees for qualified medical expenses and, depending on the HRA type, some insurance premiums. Reimbursements are tax-free to employees and tax-deductible for employers. HRAs are established and administered by employers; they are not owned by employees….

Health Plan Categories Health insurance plans sold through the U.S. Health Insurance Marketplace are grouped into metal tiers—Bronze, Silver, Gold, and Platinum—plus a Catastrophic option. These categories indicate how costs are typically split between the insurer and the enrollee, and they all must cover the same essential health benefits and free preventive services. How the…

Key takeaways HMOs (Health Maintenance Organizations) are managed-care health plans that emphasize lower premiums and coordinated, preventive care through a defined provider network. Members select a primary care physician (PCP) who manages care and issues referrals to in-network specialists. HMOs typically limit coverage to in-network providers except for true emergencies or approved out-of-area urgent care….

Health Insurance Portability and Accountability Act (HIPAA) The Health Insurance Portability and Accountability Act (HIPAA) is a U.S. federal law that sets national standards to protect health insurance coverage and to safeguard the privacy and security of individuals’ medical information. Enacted in 1996, HIPAA governs how protected health information (PHI) is used, disclosed, stored, and…

Health Insurance Marketplace The Health Insurance Marketplace (exchange) created under the Affordable Care Act provides a centralized way for individuals, families, and small businesses to compare and buy private health insurance plans. Many states run their own marketplaces; where they do not, a federal exchange serves residents. The Marketplace aims to increase access to insurance…

Health Insurance Health insurance is a contract in which an insurer agrees to pay some or all of your medical expenses in exchange for a regular premium. Plans typically run on a one-year basis and define what services are covered, how much you pay out of pocket, and which providers are in-network. How health insurance…

Heads of Agreement A heads of agreement (also called heads of terms or a letter of intent) is an initial document that outlines the basic framework of a proposed transaction or partnership. It is used during the pre-contractual stage to set out the main commercial points before detailed negotiations and the drafting of a final…

Headline Risk Key takeaways Headline risk is the chance that a news story or headline will move the price of an individual security, a sector, or the broader market. Headlines can trigger rapid, sometimes outsized price moves even if the story is incorrect or incomplete. Companies manage it through PR and disclosures; investors manage it…

Headline Inflation: What It Is and How It Relates to the Consumer Price Index Key takeaways * Headline inflation is the overall change in prices for all goods and services in an economy, typically reported via the Consumer Price Index (CPI). * The CPI measures prices for a fixed “basket” of goods and services and…

Headline Effect: What It Is, How It Works, Example What is the headline effect? The headline effect describes how negative news disproportionately influences consumer and market behavior compared with positive news. When negative headlines dominate the media, individuals, investors, and institutions often react more strongly—cutting spending, selling assets, or reallocating capital—even if the underlying fundamentals…

Headline Earnings Headline earnings measure a company’s profit from its core operational, trading, and investment activities by excluding one-time or exceptional items. The aim is to show how the business performs in its “business as usual” capacity without distortions from disposals, discontinued operations, write-downs, or other non-recurring items. Key takeaways Headline earnings focus on ongoing…

Headhunter: What They Do and How They’re Paid A headhunter (also called an executive recruiter) is an individual or firm hired by an employer to find and recruit candidates for specific roles—typically high-level, specialized, or hard-to-fill positions. Employers use headhunters when they need specialized talent quickly or when internal recruiting efforts aren’t producing the right…

Head Trader What is a head trader? A head trader (also called head of trading) manages a trading business and is ultimately responsible for its positions, risk profile, and profitability. In registered securities firms, the head trader supervises traders and other trading personnel, may execute trades personally, and ensures regulatory and internal compliance across the…

Head of Household (HOH) Head of Household is a U.S. federal tax filing status for unmarried taxpayers who support a qualifying dependent and maintain a home for that person. It generally offers a larger standard deduction and more favorable tax brackets than the Single filing status. Key points Available to unmarried or considered-unmarried taxpayers who…

Head-Fake Trade Key takeaways * A head-fake trade is a false breakout: price moves through a key technical level and then quickly reverses back in the original direction. * Head-fakes most often occur at major support/resistance, trendlines, or widely watched moving averages (e.g., 50‑day, 200‑day SMA). * They frequently result from stop‑loss orders being triggered…

Head and Shoulders Pattern The head and shoulders pattern is a common technical-analysis formation that signals a likely reversal of a prevailing trend. The standard (bearish) head and shoulders suggests an upcoming reversal from an uptrend to a downtrend; the inverse (bullish) version signals a reversal from a downtrend to an uptrend. Components and identification…

Hazardous Activity Hazardous activity refers to hobbies, sports, or occupations that an insurer classifies as high-risk because they increase the likelihood of injury, disability, or death. Common examples include scuba diving, BASE jumping, hang gliding, race car driving, piloting small aircraft, horseback riding, bungee jumping, parasailing, and certain types of construction, logging, offshore work, and…

Hazard Rate What it is The hazard rate measures the instantaneous likelihood that a non-repairable item will fail at a specific age, given that it has survived up to that age. It is a core concept in survival analysis (also called reliability analysis, duration analysis, or event-history analysis depending on the field) and is widely…

Hazard Insurance: What It Covers and How It Works Overview Hazard insurance is the portion of a homeowners insurance policy that protects a property’s structure from sudden, physical damage caused by covered perils such as fire, wind, hail, lightning, and certain types of storm or snow damage. Lenders typically require hazard coverage because it protects…