Exam 6: Techniques of Assetliability Management: Futures, Options, and Swaps

If a bank has a negative dollar gap and is short in T-bill futures, if interest rates fall, the _________ in the net interest margin of the bank will be ______ in the T-bill futures.

If a trader buys a financial futures contract and interest rates rise, the trader will:

In a micro hedge, the hedge is linked directly to a specific asset.

Mark-to-market is a term in the futures market that means that:

Which of the following is NOT one of the steps involved in hedging the interest rate Sensitivity position of the bank.

Which of the following is unique to the cash market, as opposed to the futures market?

Futures contracts are standardized but NOT usually traded on an organized exchange.

Delivery of the underlying financial instrument occurs for most futures transactions.

Interest rate swaps are intended to:

From the perspective of the buyer, a call option is concerned with the ________ of a Financial asset.

An interest rate cap is a contract that reduces the exposure of a floating rate borrower (or a liability sensitive bank) to increases in interest rates.

Which of the following hedges is for the entire portfolio of the bank?

A long or buy hedge would usually be used if the bank would be harmed in the cash market by rising interest rates.

Another name for a swap in which a dollar fixed-rate loan is swapped for a dollar Floating-rate loan is a ______ swap.

A bank with a positive dollar gap could buy call options in order to hedge its interest rate risk.

The difference between the cash and futures price of the financial instrument that is used For a hedge is known as:

If the margin balance falls below the exchange mandated minimum when trading futures Contracts, the trader will be required to add funds to the:

The seller in a futures contract is said to have a:

Current accounting procedures for futures contracts are set by:

Futures are most commonly used for long-term adjustments in interest rate risk while swaps usually are used for short term adjustments.