When the Financial Institution Is Hedging Interest-Rate Risk on Its

question 78

Multiple Choice

When the financial institution is hedging interest-rate risk on its overall portfolio, then the hedge is a ________.

• A) macro hedge
• B) micro hedge
• C) cross hedge
• D) futures hedge

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Definitions:

Service Equipment

Assets and tools required for the maintenance, repair, and operation of buildings and services, typically not directly tied to production operations.

Amortized

Refers to the process of gradually reducing the cost or value of an asset or debt through periodic payments over a set period.

Lease Payment

Regular payments made by a lessee to a lessor for the use of an asset, such as real estate or equipment, over a specified period.

Original Investment

The initial amount of money used to purchase an asset or security or to fund a project.