Which of the following statements regarding a short hedge is true?
A)A short hedge is when an FI takes a short position in a futures contract when rates re expected to rise;
B)The FI loses net worth on its balance sheet if rates rise.
C)A short hedge seeks to hedge the value of its net worth by selling an appropriate number of futures contracts.
D)None of the above statements are true.
E)All of the above statements are true.

Question

Quizplus · Accepted Answer

A short hedge involves taking a short position in futures to protect against rising rates, which can decrease the value of an FI's assets and net worth. All statements accurately describe aspects of a short hedge.

Which of the Following Statements Regarding a Short Hedge Is