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.
