It Is June

question 432

Multiple Choice

It is June. You are over-borrowed from October to January on your deposit book. How would you hedge using FRAs?

• A) Sell 3x6
• B) Buy 3x6
• C) Sell 4x7
• D) Buy 4x7

---

Definitions:

Second-order Conditioning

This is a process in which a stimulus that's already linked to a response becomes associated with another, new stimulus, creating a second conditioned stimulus.

Extinction

In behavioral psychology, the process by which a previously reinforced behavior decreases in frequency and eventually ceases, often because the reinforcement is no longer provided.

Dread

An intense feeling of fear or apprehension about something that is perceived as threatening or dangerous.

Contingency

An upcoming occurrence or situation that may happen but whose certainty cannot be guaranteed.