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What Is the Basic Difference Between Hedgers and Speculators

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What is the basic difference between hedgers and speculators?


Definitions:

Effective Annual Rate

The annualized rate of interest on a loan or financial product, adjusted for the effects of compounding.

Continuous Compounding

A mathematical approach where interest earnings are immediately reinvested to generate additional earnings continuously.

Stated Rate

The annual interest rate stated on a financial instrument, such as a loan or bond, not adjusting for compounding or fees.

Interest-Only Loan

A loan where the borrower is required to pay only the interest on the principal balance for a set period of time.

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