An FI Has Reduced Its Interest Rate Risk Exposure to the Lowest

question 78

Multiple Choice

An FI has reduced its interest rate risk exposure to the lowest possible level by selling sufficient futures to offset the risk exposure of its whole balance sheet or cash positions in each asset and liability.The FI is involved in

• A)microhedging.
• B)selective hedging.
• C)routine hedging.
• D)overhedging.
• E)speculation.

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Definitions:

Matrix Structure

A structure that sets up teams from different departments, thereby creating two or more intersecting lines of authority; also called a project management structure.