Listen to a Business English Dialogue about Short hedge
Adam: Hey Samantha, have you ever heard of a short hedge in finance?
Samantha: Yeah, I think it’s when you use financial instruments to protect against the risk of falling prices in an asset.
Adam: That’s right. It’s like insurance against potential losses.
Samantha: So, how exactly does it work?
Adam: Well, let’s say you’re a farmer and you’re worried about the price of your crops dropping. You could use a short hedge to lock in a minimum price for your crops.
Samantha: Ah, I see. So, even if prices fall, you’re protected by the hedge.
Adam: Exactly. It helps to minimize the impact of price fluctuations on your business.
Samantha: That sounds like a useful strategy for managing risk.
Adam: Definitely. It’s all about mitigating potential losses and ensuring stability in your business operations.
Samantha: Thanks for explaining that, Adam. I’ll have to look into incorporating short hedges into my financial planning.
Adam: No problem, Samantha. It’s always good to be proactive about managing risk in business.