What Is a Macrohedge

question 47

Multiple Choice

What is a macrohedge?

• 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:

Overhead Costs

Overhead costs are the indirect expenses associated with running a business that are not directly tied to a specific product or service, including utilities, rent, and management salaries.

Plantwide Overhead Rate

A single overhead absorption rate used throughout an entire factory or plant to allocate overhead costs to production activities.

Machine Hours

A measure of production time, calculated as the total number of hours machines are operated in the production process.

Overhead Assigned

The process of allocating indirect costs, such as utilities or rent, to specific products or departments within a company.