A Macro Hedge Is a

question 19

Multiple Choice

A macro hedge is a

• A) Hedge of a particular asset or liability
• B) Hedge using futures on macroeconomic variables
• C) Hedge using options in liabilities
• D) Hedge without basis risk
• E) Hedge of an entire balance sheet
• Refer to the information below for questions 30-32:
• XYZ Bank has D_A = 2.4 years and D_L = 0.9 years. The bank has total equity of $82 million and total assets of $850 million. Currently, interest rates are at 6%.

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Definitions:

Purchase Commitments

Agreements to buy goods or services at a predetermined price, often specifying quantity and delivery dates.

Gross Profit Method

This is an accounting technique used to estimate inventory value, calculating gross margin as a percentage of sales to find the cost of goods sold and ending inventory.