If a Financial Institution Expects That the Market Value of Its

question 7

Multiple Choice

If a financial institution expects that the market value of its municipal bonds will decline because of economic conditions, it could hedge its position by ____ futures contracts on ____.

• A)purchasing; Treasury bonds
• B)purchasing; the S&P 500 Index
• C)purchasing; the Municipal Bond Index
• D)selling; the Municipal Bond Index

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Definitions:

Raven's Matrices

A nonverbal group test typically used to measure abstract reasoning and regarded as a nonverbal estimate of fluid intelligence.

WAIS-III

The Wechsler Adult Intelligence Scale-Third Edition, a tool for assessing the intelligence and cognitive ability of adults.

WISC-IV

The Wechsler Intelligence Scale for Children-Fourth Edition, a tool used to assess the intellectual ability of children between the ages of 6 and 16.

Raven's Progressive Matrices

A nonverbal group test typically used to assess abstract reasoning and fluid intelligence.