Multiple Choice
Which of the following are correct about off-balance sheet activities?
A) They provide a key source of interest income for many FIs.
B) By hedging against on-balance-sheet interest rate, FX and credit risks, OBS derivative instruments actually reduce FI overall insolvency risk.
C) Higher regulatory costs on derivative instruments may cause FIs to over-hedge resulting in a decrease in FI insolvency risk.
D) All of the listed options are correct.
Correct Answer:
Verified
Correct Answer:
Verified
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