Which of the Following Are Correct About Off-Balance Sheet Activities

question 37

Multiple Choice

Which of the following are correct about off-balance sheet activities?

• A)They provide a key source of interest income for many FIs.
• B)By hedging against on-balance-sheet interest rate, FX and credit risks, OBS derivative instruments actually reduce FI overall insolvency risk.
• C)Higher regulatory costs on derivative instruments may cause FIs to over-hedge resulting in a decrease in FI insolvency risk.
• D)All of the listed options are correct.

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