What Is a Microhedge

question 2

Multiple Choice

What is a microhedge?

• A) It is a hedge of the bank's aggregate portfolio.
• B) It is a hedge using just one type of futures contract.
• C) It is the hedge of a specific asset or liability for which the bank is exposed to interest rate risk.
• D) It is a hedge using two or more types of futures contracts.
• E) It is a has that has a duration of less than one month.

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Definitions:

Article 9

A provision of the Uniform Commercial Code that governs secured transactions involving personal property, establishing a legal framework for creating and enforcing security interests.

Class of Goods

A grouping or category of goods that share similar characteristics or are aimed at a specific market segment, often used for classification in legal, commercial, or logistical contexts.

Farm Products

Goods produced by farming operations, including but not limited to crops, livestock, and products derived directly from them.

Security Interest

A legal claim or lien on assets, granted to lenders or creditors as security for a loan.