The Number of Futures Contracts That a Bank Will Need

question 97

Multiple Choice

The number of futures contracts that a bank will need in order to fully hedge its overall interest rate risk exposure and protect the net worth depends upon (among other factors) :

• A)the relative duration of bank assets and liabilities.
• B)the duration of the underlying security named in the futures contract.
• C)the price of the futures contract.
• D)All of the options are correct
• E)None of the options are correct

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Definitions:

Postal Service

A government or private sector service responsible for the collection, transport, and delivery of mail and packages.

State Spending

The amount of money a government spends on public services and goods, including education, healthcare, and infrastructure.

Education

The process of facilitating learning, or the acquisition of knowledge, skills, values, beliefs, and habits through various means.

Finance

The management of large amounts of money, especially by governments or large companies.