Which of the Following Is an Example of Microhedging Asset-Side

question 84

Multiple Choice

Which of the following is an example of microhedging asset-side portfolio risk?

• A)When an FI, attempting to lock in cost of funds to protect itself against a rise in short-term interest rates, takes a short position in futures contracts on CDs.
• B)FI manager trying to pick a futures contract whose underlying deliverable asset is not matched to the asset position being hedged.
• C)When an FI hedges a cash asset on a direct dollar-for-dollar basis with a forward or futures contract.
• D)When an FI manager wants to insulate the value of the institution's bond portfolio fully against a rise in interest rates.
• E)When an FI manager wishes to use futures or other derivative securities to hedge the entire balance sheet duration gap.

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Definitions:

Halo Errors

A type of cognitive bias in which the perception of one positive trait leads to the unjustified attribution of other positive traits or qualities.

Human Factors Psychology

A field of psychology that focuses on understanding how people interact with products, systems, and environments to improve design and usability.

Actively Disengaged

Refers to individuals who are not only unenthusiastic or uncommitted at work but also manifest their displeasure in ways that undermine their workplace's accomplishments and environment.

Not Engaged

A state in which an individual is present but lacks connection with the activity or environment, showing indifference or detachment.