Texas Hedge

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Texas Hedge

A hedged position that increases rather than reduces risk. A Texas hedge is made without regard, or with incorrect regard, for the mathematical formulas necessary to lessen exposure. A Texas hedge may involve applying models incorrectly and finding the wrong efficient portfolio frontier and therefore investing in the "wrong" securities.
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Strong cash flow from operations of $1,517 million in 2007 was driven by $764 million higher adjusted EBITDA primarily resulting from the Texas hedge reset transaction in the fourth quarter of 2006.
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