Which of the Following Is a Problem with Duration Hedges

question 30

Multiple Choice

Which of the following is a problem with duration hedges?

• A) It is not accurate with large changes in interest rates.
• B) The hedge is instantaneous.
• C) The position is only immunised against uniform shifts in the yield curve.
• D) All of the above.

---

Definitions:

Business Cycle

Refers to the fluctuating levels of economic activity over time, including periods of expansion, peak, recession, and recovery.

Nation's Banks

Financial institutions owned or chartered by a country's government, involved in national economic management.

Failed

Unsuccessful in achieving desired goals or outcomes.

1929-1933

The period marking the beginning of the Great Depression, a severe worldwide economic downturn.