When the Financial Institution Is Hedging Interest-Rate Risk on Its

question 78

Multiple Choice

When the financial institution is hedging interest-rate risk on its overall portfolio, then the hedge is a ________.

• A) macro hedge
• B) micro hedge
• C) cross hedge
• D) futures hedge

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Definitions:

Cash Acquisition

A method of purchasing a company or asset where the buyer uses cash as the form of payment rather than stocks or other forms of payment.

Equity-Financed

Refers to the way of raising funds for business activities by selling ownership stakes in the company, rather than borrowing money.

Post-Merger

The period following the completion of a merger or acquisition, during which integration and restructuring processes occur.

Purchase Accounting Method

An accounting method used in mergers and acquisitions to allocate the purchase price to the acquired assets and liabilities.