The Number of Futures Contracts That a Bank Will Need

question 5

Multiple Choice

The number of futures contracts that a bank will need in order to fully hedge the bank's overall interest rate risk exposure and protect the bank's net worth depends upon (among other factors) : I. The relative duration of bank assets and liabilities.
II) The duration of the underlying security named in the futures contract.
III) The price of the futures contract.
IV) The debt to asset ratio.

• A) I and II
• B) II and III
• C) III and IV
• D) I, II and III
• E) I, II, III and IV

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Definitions:

Interoceptive Conditioning

A form of conditioning where bodily sensations become associated with certain stimuli, altering emotional and physiological responses.

Latent Learning

describes the process by which learning takes place without immediate evidence of that learning, often becoming apparent through a change in behavior when it's beneficial.

Mary Cover Jones

An early psychologist known for her work on desensitization and counterconditioning, particularly in relation to overcoming fears.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired: a response that is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.