What Is Overhedging

question 54

Multiple Choice

What is overhedging?

• A)Selectively hedging a proportion of an FI's balance sheet position.
• B)Choosing to bear some interest rate risk as well as credit and FX risks.
• C)Reducing the risk to the lowest level possible.
• D)Using more hedge vehicles than is necessary to offset the risk in the cash asset.
• E)Partially hedging the individual assets and liabilities.

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Definitions:

Uncertified Check

A check that has not been verified or guaranteed by the bank upon which it is drawn.

Provisionally Credits

Temporarily recorded credits in an account that are subject to confirmation.

Payment Final

The conclusive settlement of a debt or obligation, which prevents any future claims or demands for payment.

Business Day

A standard day for conducting business, typically Monday through Friday, excluding public holidays.