A hedge fund is a mutual fund that seeks to make money betting on a particular bond market, currency movements, or directional movements based on certain events such as mergers and acquisitions. The initial concept of the hedge fund, developed by Alfred Winslow Jones in the 1950s, was that securities of two different companies in similar businesses would have different characteristics in up and down markets. By buying the one likely to do the best in a rising market and selling short the one likely to do the worst in a falling market, the investor would be hedged and should make money no matter what direction the market took. Hedge funds offer plays


markets, using options, short-selling, futures, and other derivative products


Hedgers, mostly MNCs, are individuals or businesses engaged in


activities. They engage in

forward contracts

to protect the home-currency value of foreign-currencydenominated assets and liabilities on their balance sheets that are not to be realized over the life of the contracts.