Different Terms On The Portfolio Insurance Work

Portfolio Insurance Student Affiliation Date Portfolio Insurance. Why can an investor buy insurance on a risk that the investor does not have because the investor did not make the investment that is insured? Does this make any sense? Why, or why not? I strongly agree that the above statement makes sense. That is after thoroughly researching on different terms on the portfolio insurance work. Firstly, one must get to understand that this is a hedging method where an individual is protecting one's investments against all rising market risks using short-selling index futures. Most people who prefer using this technique are well vast in trading in derivatives. This method is of paramount importance, especially for those investors experiencing a high market exposure and are hence making them vulnerable targets to market-related risks CITATION Rud94 \l 1033 (Frey, 1994). Hedging risks of initiating such a technique has gained popularity as many people are c...