Explain How a Savings and Loan Manager Could Use Futures

question 60

Essay

Explain how a savings and loan manager could use futures or options to hedge against the possibility that interest rates will rise.

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Definitions:

Pay Cash

The act of making a payment for goods or services with physical currency or through a cash equivalent transaction.

Harmonized Sales Tax

A combined tax that merges a country's federal tax system with that of its states or provinces, used in some countries including Canada.

HST

Harmonized Sales Tax, a combined tax that includes both federal and provincial sales taxes in some Canadian provinces.

Financial Liability

An obligation to pay money to another party, including loans, bond issuances, and accounts payable.