22-64 What Is Overhedging

question 11

Multiple Choice

22-64 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:

NAND Function

A binary operation that produces a false output only when all its inputs are true; it's often described as "NOT AND."

NOT Function

The NOT Function is a logical operation that inverts the state of its operand; if the input is true, the output is false, and vice versa, commonly used in digital electronics and programming.

Logical Decision

The process of making a choice based on logical conditions or comparisons in programming or digital circuits.

Alternating Current

An electric current that periodically reverses direction, in contrast to direct current (DC) that flows only in one direction.