Macrohedging Is the Use of Risk-Management Instruments Such as Futures

question 29

True/False

Macrohedging is the use of risk-management instruments such as futures and options to reduce the interest rate risk of the overall bank portfolio.

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Definitions:

Short Run

A period of time during which at least one input, such as plant size, is fixed and cannot be changed.

Unemployment

The condition in which individuals who are capable of working and are seeking work are unable to find employment.

Phillips Curve

An economic theory that suggests an inverse relationship between rates of unemployment and corresponding rates of inflation.

Money Supply

Refers to the total amount of money available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts.