Off-Balance-Sheet Hedging Involves Making Changes in the On-Balance-Sheet Assets and Liabilities

question 53

True/False

Off-balance-sheet hedging involves making changes in the on-balance-sheet assets and liabilities to protect the FI's profits from FX risk and taking positions in forward or other derivative securities to hedge FX risk.

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Definitions:

Memorandum of Agreement

A document outlining an agreement between parties before finalizing a more formal contract, detailing the preliminary terms and conditions.

Statute of Frauds

A legal concept that requires certain types of contracts to be executed in writing and signed by the party to be charged.

Typed Agreement

A formal contract that has been created and recorded in written form, usually typewritten, to outline specific terms and conditions between parties.

Writing Requirement

The legal principle that certain contracts or agreements must be recorded in written form to be legally enforceable.