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Investments Dictionary

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Hedge Fund
A private investment pool, open to institutional or wealthy investors, that is largely exempt from SEC regulation and can pursue more speculative policies than mutual funds.
Hedge ratio (for an option)
The number of stocks required to hedge against the price risk of holding one option. Also called the option's delta.
Investing in an asset to reduce the overall risk of a portfolio.
Hedging Demands
Demands for securities to hedge particular sources of consumption risk, beyond the usual mean variance diversification motivation.
High Water Mark
The previous value of a portfolio that must be re‐attained before a hedge fund can charge incentive fees.
Holding-period Return
The rate of return over a given period.
Homogenous Expectations
The assumption that all investors use the same expected returns and covariance matrix of security returns as inputs in security analysis.
Horizon Analysis
Forecasting the realized compound yield over various holding periods or investment horizons.

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