A Financial Institution Can Hedge Its Interest Rate Risk by

question 50

Multiple Choice

A financial institution can hedge its interest rate risk by

• A)matching the duration of its assets weighted by the book value of its assets to the duration of its liabilities weighted by the book value of its liabilities.
• B)setting the duration of its assets equal to half that of the duration of its liabilities.
• C)matching the duration of its assets weighted by the market value of its assets with the duration of its liabilities weighted by the market value of its liabilities.
• D)setting the duration of its assets weighted by the market value of its assets to one-half that of the duration of the liabilities weighted by the market value of the liabilities.

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Definitions:

Program Activities

Specific tasks or operations that are carried out as part of a program or project to achieve its objectives.

Observers

Individuals who watch or monitor activities or events without directly participating in them.

Self-Observations

The process of intentionally focusing attention on one's own thoughts, emotions, and behaviors to gain insight or promote self-awareness.

Worker Observations

The act of noting or recording the behaviors, practices, or conditions of employees within a workplace.