An FI Has Reduced Its Interest Rate Risk Exposure to the Lowest

question 14

Multiple Choice

An FI has reduced its interest rate risk exposure to the lowest possible level by selling sufficient futures to offset the risk exposure of its whole balance sheet or cash positions in each asset and liability.The FI is involved in

• A)microhedging.
• B)selective hedging.
• C)routine hedging.
• D)overhedging.

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Definitions:

Intelligence

The ability to acquire and apply knowledge and skills, showing the capacity for logic, understanding, self-awareness, learning, emotional knowledge, reasoning, planning, creativity, and problem-solving.

Resilience

The ability to recover quickly from difficulties or adapt to change effectively.

Obstacles

Refers to challenges or barriers that hinder progress towards a goal.

Grit

A personality trait characterized by perseverance and passion for long-term goals, often associated with resilience in overcoming obstacles.