If You Funded a Fixed-Income Investment Portfolio with Short-Term Deposits

question 100

Multiple Choice

If you funded a fixed-income investment portfolio with short-term deposits, how would you hedge your interest rate exposure with interest rate swaps?

• A) Pay fixed and receive floating through swaps for t
• B) Pay floating and receive fixed through swaps for t
• C) You cannot : the maturity of the swaps would be lo
• D) You should not: there would be too much basis risk

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Definitions:

Social Basis

The foundational structures and relationships within a society that determine its organization, norms, and activities.

Trafficked

The movement of people or goods illegally, often involving coercion or deception, for purposes such as forced labor or sexual exploitation.

Profit

The financial gain obtained when the amount earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Birth Control Pill

A medication taken orally by women to prevent pregnancy, functioning through the regulation of hormones to inhibit ovulation and other fertility factors.