Question 1

Which of the following statements is true?

Accepted Answer

A)  Micro- and macro-hedging always lead to the same hedging strategies and results. 
B)  Micro- and macro-hedging can lead to the same hedging strategies but will lead to different results. 
C)  Micro- and macro-hedging will lead to different hedging strategies but will also lead to the same results. 
D)  Micro- and macro-hedging can lead to different hedging strategies and results. 
A)  Micro- and macro-hedging always lead to the same hedging strategies and results. 
B)  Micro- and macro-hedging can lead to the same hedging strategies but will lead to different results. 
C)  Micro- and macro-hedging will lead to different hedging strategies but will also lead to the same results. 
D)  Micro- and macro-hedging can lead to different hedging strategies and results.

Question 2

Which of the following is an example of microhedging asset-side portfolio risk?

Accepted Answer

A)  When an FI, attempting to lock in cost of funds to protect itself against a rise in short-term interest rates, takes a short position in futures contracts on CDs. 
B)  FI manager trying to pick a futures contract whose underlying deliverable asset is not matched to the asset position being hedged. 
C)  When an FI hedges a cash asset on a direct dollar-for-dollar basis with a forward or futures contract. 
D)  When an FI manager wants to insulate the value of the institution's bond portfolio fully against a rise in interest rates. 
A)  When an FI, attempting to lock in cost of funds to protect itself against a rise in short-term interest rates, takes a short position in futures contracts on CDs. 
B)  FI manager trying to pick a futures contract whose underlying deliverable asset is not matched to the asset position being hedged. 
C)  When an FI hedges a cash asset on a direct dollar-for-dollar basis with a forward or futures contract. 
D)  When an FI manager wants to insulate the value of the institution's bond portfolio fully against a rise in interest rates.

Which of the following statements is true?

Which of the following is an example of microhedging asset-side portfolio risk?

Why Are Financial Institutions Special

The Financial Services Industry: Depository Institutions

The Financial Services Industry: Other Financial Institutions

Risk of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Credit Risk I: Individual Loan Risk

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risk

Capital Management and Adequacy

Filters

Exam 7: Managing Interest Rate Risk Using Off Balance Sheet Instruments

Which of the following statements is true?

Which of the following is an example of microhedging asset-side portfolio risk?

Why Are Financial Institutions Special

The Financial Services Industry: Depository Institutions

The Financial Services Industry: Other Financial Institutions

Risk of Financial Institutions

Interest Rate Risk Measurement: The Repricing Model

Interest Rate Risk Measurement: the Duration Model

Credit Risk I: Individual Loan Risk

Market Risk

Credit Risk I: Individual Loan Risk

Credit Risk II: Loan Portfolio and Concentration Risk

Sovereign Risk

Foreign Exchange Risk

Liquidity Risk

Liability and Liquidity Management

Off-Balance-Sheet Activities

Technology and Other Operational Risk

Capital Management and Adequacy

Filters