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:

Wealthy Countries

Wealthy countries are nations with a high level of income per capita, advanced infrastructure, and a strong standard of living.

Competitive Market

A market structure where many firms offer products or services that are similar, allowing consumers to have choices, driving prices down.

Resource Use

The way in which human societies utilize natural resources to fulfill their needs and wants.

Pollution

The introduction of harmful substances or products into the environment, causing adverse effects on living organisms and ecosystems.