Hedging foreign currency is a concept that serves as a stabilizing factor when dealing with the global economy and transactions that are computed and fulfilled in a foreign currency.

However, hedging is used in many other situations than foreign currency. Conduct research to get a firm grasp on the concept of hedging. Feel free to research hedging in the stock market, futures market, or any other aspect of the business world that uses hedging as a risk offset.

In your own words, define hedging? Why is it important that you understand this concept? How is this concept utilized in the accounting industry?