A Hedge Agreement is a very common and very necessary part of investing. We have all heard of the phrase “hedging your bets,” and a hedge agreement helps you do that. There are even entire mutual funds known as hedge funds which exist for no other reason than to help you reduce the overall amount of risk in your investment portfolio.

Here is an example of hedging. Let’s say that General Motors is about to unveil a new technology that is destined to rocket their cars to the top of the market, but you are worried it won’t be ready in time. You invest a percentage of your portfolio in GM, hoping that this new technology drives up their stock price, but to hedge your bets, you also invest in Ford, just in case GM falls down on the job. You could also hedge your bet on GM by investing in bonds or a hedge fund that has very low risk to offset your risky GM investment. A hedge agreement simply spells out your investment, page by page, and explains what your risk is, what your obligations are and what it is that you have purchased.

When you first see a hedge agreement, you may think it looks a lot like a receipt for your investment. That isn’t far off. At the top of the average hedge agreement, you will notice that your name and the name of your investment firm is listed. Underneath, you will find a SEC disclaimer and then a comprehensive breakdown of the investment you just made. The investment is broken down into dozens of categories and often times, these agreements are standardized to appear the same for SEC filing purposes. If you have any questions about your hedge agreement, simply talk to your broker or your investment firm and they can easily explain any issues you may have.

While hedge agreements can be for any type of investment, you often see hedges done with low risk investments such as bonds or hedge funds. It is important to note, however, that every investment, save an FDIC insured savings account, carries risk. A healthy investment portfolio is one that carries an equal amount of risk throughout, so if your current portfolio doesn’t contain a hedge agreement of some kind, you may want to look into adding one. A hedge agreement can be an investor’s best friend when it comes to building a happy and healthy investment portfolio.

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The Hedge Agreement for Amerigroup Corporation was made available today by online legal document provider RealDealDocs.com.

The Amerigroup Corporation hedge agreement with Wells Fargo Bank is a convertible bond hedge transaction. The hedge agreement details the March 2007 deal regarding $240 million dollars and offers a look into financial transactions just before the economic fall. The Viropharma Inc. hedge agreement is a similar convertible bond hedge transaction, also with Wells Fargo Bank and detailing the terms for $225 million dollars in the same year. Both of these hedge agreements are available in their entirety on the RealDealDocs.com website.

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RealDealDocs.com is a division of Practice Technologies, Inc. the creators of SmartRules.com. SmartRules provides step by step guides to local rules and civil procedure for state courts & federal courts throughout the country.

Popularity: 4% [?]