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

Name: A bank with a positive dollar gap could buy call options in order to hedge its interest rate risk.
Brand: Quizplus
Rating: 4.9 (33 reviews)

Question

Quizplus · Accepted Answer

Buying call options on interest rate futures can hedge against rising interest rates, which is a concern for a bank with a positive dollar gap, as it indicates more rate-sensitive assets than liabilities.

A Bank with a Positive Dollar Gap Could Buy Call