Which of the Following Is an Example of Microhedging Asset-Side

question 84

Multiple Choice

Which of the following is an example of microhedging asset-side portfolio risk?

• A)When an FI, attempting to lock in cost of funds to protect itself against a rise in short-term interest rates, takes a short position in futures contracts on CDs.
• B)FI manager trying to pick a futures contract whose underlying deliverable asset is not matched to the asset position being hedged.
• C)When an FI hedges a cash asset on a direct dollar-for-dollar basis with a forward or futures contract.
• D)When an FI manager wants to insulate the value of the institution's bond portfolio fully against a rise in interest rates.
• E)When an FI manager wishes to use futures or other derivative securities to hedge the entire balance sheet duration gap.

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Definitions:

Histogram

A graphical display of data using bars of different heights, where each bar groups numbers into ranges and taller bars show that more data falls in that range.

Histogram

A graphical representation of the distribution of numerical data, where the data is grouped into ranges and each range corresponds to a vertical bar.

Centers

Locations or points that are central within a larger area, often serving as focal points for activities or distribution.

Histogram

A graphical representation of the distribution of numerical data, where the data is grouped into bins or intervals.