22-28 Selective Hedging Occurs by Reducing the Interest Rate Risk

question 67

True/False

22-28 Selective hedging occurs by reducing the interest rate risk by selling sufficient futures contracts to offset the interest rate risk exposure of a portion of the cash positions on the balance sheet.

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Definitions:

Planning

The process of making plans for something, including setting goals, defining actions to achieve the goals, and mobilizing resources to execute the actions.

Managing

The process of directing, controlling, and administrating an organization or effort towards achieving a set goal.

Capital Budgeting

The process used by companies to evaluate and prioritize major investments and expenditures.

Capital Structure

The mix of various forms of external funds and equity that a company uses to finance its activities.