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When a Financial Institution Is Hedging Interest-Rate Risk on Its

question 6

Multiple Choice

When a financial institution is hedging interest-rate risk on its overall portfolio,the hedge is a ________.


Definitions:

Marginal Cost

The additional cost incurred in the production of one more unit of a good or service.

Marginal Product

The additional output that is produced by employing one more unit of a particular input, while holding other inputs constant.

Fixed Cost

A financial outlay that is unaffected by variations in the production or sales levels of goods and services.

Marginal Cost

The expense associated with creating an extra unit of a product or service.

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