Which of the Following Is True About Hedging Using Duration

question 54

Multiple Choice

Which of the following is true about hedging using duration analysis?

• A) The institution may hedge its earnings and its net worth simultaneously.
• B) If market value weighted asset duration is greater than the liability counterpart, sell financial futures to "immunize."
• C) If market value weighted asset duration is greater than the liability counterpart, buy financial futures to "immunize."
• D) Maturity hedging provides the same hedging as duration hedging.

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Definitions:

Competence

Refers to having the necessary ability, knowledge, or skill to perform a task successfully.

Meaning

The significance, purpose, or value that an individual assigns to an experience, concept, or aspect of their life.

Discipline

Discipline refers to the practice of training oneself or others to follow rules or a code of behavior, using punishment to correct disobedience, or the controlled behavior resulting from such training.

Self-reference Effect

A phenomenon where individuals are more likely to remember information that is personally relevant or related to themselves.