Discuss the Concept of Hedging and What Is Necessary for It

question 21

Essay

Discuss the concept of hedging and what is necessary for it to be effective.

---

Definitions:

Treasury Shares

Shares released to the public and afterward reclaimed by the issuer, cutting down the overall count of stock available on the open market.

Journalize

The process of recording transactions in an accounting journal.

Par Common Stock

Par Common Stock refers to the nominal or face value assigned to common shares in the corporate charter, which has implications for stock issuance and accounting.

Stockholders' Equity

The stake of shareholders in a company, determined by subtracting the company's liabilities from its assets, signifying their claim on the company's resources.