Hardening
What It Is:
Hardening refers to stabilization or steady increases in a price level.
How It Works/Example:
Financial instruments and derivatives frequently experience volatile market-price fluctuations. Hardening is the process of market prices gradually returns to a normal levels following a period of instability. Likewise, an item that experiences steady long-term gains rather than abrupt short-term price escalations is described as hardening
Why It Matters:
Hardened securities and derivatives tend to experience smaller day-to-day fluctuations and are often attractive to investors, because they become easier to predict and have a decreased level of risk.
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Cached on May 23, 2012, 9:29 am