Pension funds commonly engage in interest rate swaps to hedge the exposure of their bond and mortgage portfolios to ____ risk.

Question

Quizplus · Accepted Answer

Pension funds commonly engage in interest rate swaps to hedge the exposure of their bond and mortgage portfolios to interest rate risk, as changes in interest rates can have a significant impact on bond and mortgage prices. This allows them to manage their interest rate risk and potentially avoid losses.

Pension Funds Commonly Engage in Interest Rate Swaps to Hedge