What is a microhedge?
A) It is a hedge of the bank's aggregate portfolio.
B) It is a hedge using just one type of futures contract.
C) It is the hedge of a specific asset or liability for which the bank is exposed to interest rate risk.
D) It is a hedge using two or more types of futures contracts.
E) It is a has that has a duration of less than one month.

Question

Quizplus · Accepted Answer

A microhedge is a specific hedging strategy designed to hedge a single asset or liability for which a bank is exposed to interest rate risk. It is used to mitigate the risk of changes in interest rates on a specific, targeted level rather than for the overall portfolio.

What Is a Microhedge