An FI Acts Defensively as a Hedger to Reduce FX

question 45

True/False

An FI acts defensively as a hedger to reduce FX exposure if it engages in the purchase and sale of foreign currencies for hedging purposes to offset customer or FI exposure in any given currency.

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Definitions:

Causa Mortis

Causa mortis, or in contemplation of death, refers to gifts or actions taken by an individual who believes their death is imminent.

Immediate Death

The rapid loss of life following an event or condition, without a prolonged period of illness or decline.

Gift Causa Mortis

A gift that is made in contemplation of one’s immediate death.

Contemplation

The action of looking thoughtfully at something for a long time or thinking about something deeply.