What Is Overhedging

question 54

Multiple Choice

What is overhedging?

• A)Selectively hedging a proportion of an FI's balance sheet position.
• B)Choosing to bear some interest rate risk as well as credit and FX risks.
• C)Reducing the risk to the lowest level possible.
• D)Using more hedge vehicles than is necessary to offset the risk in the cash asset.
• E)Partially hedging the individual assets and liabilities.

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Definitions:

Autoimmune

Pertaining to diseases or responses where the body's immune system mistakenly attacks its own cells, tissues, or organs.

Ruminants

A group of herbivorous mammals that are able to acquire nutrients from plant-based food by fermenting it in a specialized stomach prior to digestion, mainly through microbial actions.

Cellulose

Tough, insoluble polysaccharide of glucose monomers; the major structural material in plants.

Microbes

Microscopic organisms, including bacteria, viruses, fungi, and protozoa, that can be either beneficial or harmful to other organisms.