When interest rates fluctuate widely, FIs react by utilizing which of the following?
A)financial futures
B)swaps
C)options
D)All of the above are used.

Question

Quizplus · Accepted Answer

FIs may use all of the above derivatives to manage interest rate risks during periods of fluctuation. Financial futures can be used to hedge against unfavorable movements in interest rates, swaps can be used to exchange fixed and variable rate payments to better manage interest rate payments, and options can be used to limit losses in case of unfavorable interest rate movements.

When Interest Rates Fluctuate Widely, FIs React by Utilizing Which