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    Financial Institutions Management Study Set 2
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    Exam 7: Managing Interest Rate Risk Using Off-Balance-Sheet Instruments
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    Explain How Hedging Affects Risk and Return
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Explain How Hedging Affects Risk and Return

Question 61

Question 61

Essay

Explain how hedging affects risk and return.Use a diagram to stress your points.In your answer differentiate between routine hedging and hedging selectively.

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Routine hedging occurs when an FI reduce...

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