Futures Contracts Are the Primary Security That Insurance Companies and Banks

question 34

True/False

Futures contracts are the primary security that insurance companies and banks use to hedge interest rate risk prior to originating mortgages.

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Definitions:

Scoria Cones

Volcanic cones made up of fragments of lava or rock ejected during explosive eruptions, usually with a bowl-shaped crater at the summit.

Basaltic Lava

A dark, fine-grained volcanic rock that forms from the quick cooling of basaltic lava, rich in iron and magnesium.

Viscous Lava

Lava that has a thick, sticky consistency due to a high silica content, flowing slowly.

Lava Fountain

A spectacular volcanic phenomenon where lava is forcefully ejected into the air from a vent or fissure, forming a fountain-like display.