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If We Were to Design a Macrohedge, Which of the Following

question 24

Multiple Choice

If we were to design a macrohedge, which of the following positions would help reduce the bank's interest rate risk?
I. Long position in bond futures contracts
II. Buying put options on bonds
III. Purchasing an interest rate cap


Definitions:

Cooking

The process of preparing food for consumption by applying heat, combining ingredients, or both, following various methods and traditions.

Opportunity Cost

The worth of the best alternative option given up due to a decision made.

Production

The method of merging different material and immaterial inputs, such as plans and expertise, to produce something that can be consumed.

Opportunity Cost

The penalty for not embracing the immediate subsequent advantageous alternative when choosing.

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