Which of the Following Are Correct About Off-Balance Sheet Activities

question 37

Multiple Choice

Which of the following are correct about off-balance sheet activities?

• A)They provide a key source of interest income for many FIs.
• B)By hedging against on-balance-sheet interest rate, FX and credit risks, OBS derivative instruments actually reduce FI overall insolvency risk.
• C)Higher regulatory costs on derivative instruments may cause FIs to over-hedge resulting in a decrease in FI insolvency risk.
• D)All of the listed options are correct.

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Definitions:

Poverty

A socioeconomic condition characterized by a significant lack of financial resources or income, leading to an inability to meet basic living needs.

Welfare Dependency

A situation where individuals or families rely on government welfare benefits as their primary source of income, often criticized for discouraging work effort.

Employed White Men

A demographic group consisting of men who are identified as White (race) and are actively engaged in paid employment.

Black Females

Refers to women of African descent or those who identify as Black, focusing on their unique experiences, identities, and societal positions.