I know this sounds like a dumb question, but please hear me out. English is not my native language.

Hedge has about three different definitions, all related to limiting. I'm having trouble with perhaps the one most relevant to the GRE:

hedge: (verb) limit or qualify (something) by conditions or exceptions.

Does it basically means to reduce the effectiveness of something? I know qualify means "to make something less absolute", but I'm also having difficulties how that happens. How do you make something absolute...less absolute?

Does the following sentence work?
The legislators hedged the proposed bill, due to heavy backlash from their constituents.

Does the word "hedgefund" has anything to do with the literal definition of hedge? If yes, what is it limiting? Risk?