Interest Rate Hedging Devices Used by Banks Today Include Which

question 67

Multiple Choice

Interest rate hedging devices used by banks today include which of the following?

• A)Financial futures contracts.
• B)Interest-rate options contracts.
• C)Interest rate swaps.
• D)Interest rate caps,floors,and collars.
• E)All of the options are correct

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Definitions:

Short-run Phillips Curve

The short-run Phillips Curve depicts an inverse relationship between the rate of inflation and the unemployment rate within an economy over a short period.

Expected Inflation

The rate at which people predict prices will rise in the future, influencing saving and spending behavior.

Phillips Curve

An economic concept that illustrates an inverse relationship between the rate of unemployment and the rate of inflation in an economy.

Natural Rate

Refers to the level of economic output or unemployment that is consistent with stable inflation, not influenced by short-term fluctuations.