A Bank That Uses a Short Hedge Is Most Likely

question 94

Multiple Choice

A bank that uses a short hedge is most likely:

• A)trying to avoid higher borrowing costs.
• B)trying to avoid declining asset values.
• C)trying to avoid lower than expected yields from loans and securities.
• D)trying to avoid higher borrowing costs or trying to avoid declining asset values.
• E)trying to offset a negative duration gap.

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Definitions:

Childbearing Years

The period in an individual's life, typically between puberty and menopause, when they are biologically capable of conceiving and bearing children.

Family Life Cycle

A series of stages through which a family progresses over time, including single adulthood, marriage, parenthood, and retirement.

Income

The financial gain or money received by an individual or household, coming from various sources like employment, investments, or business ventures, used for consumption and savings.

Boomerang Kid

describes a young adult who returns to live with their parents after a period of independence, often due to economic or personal reasons.