Which of the following is an example of microhedging asset-side portfolio risk?
A)When an FI, attempting to lock in cost of funds to protect itself against a rise in short-term interest rates, takes a short position in futures contracts on CDs.
B)FI manager trying to pick a futures contract whose underlying deliverable asset is not matched to the asset position being hedged.
C)When an FI hedges a cash asset on a direct dollar-for-dollar basis with a forward or futures contract.
D)When an FI manager wants to insulate the value of the institution's bond portfolio fully against a rise in interest rates.
E)When an FI manager wishes to use futures or other derivative securities to hedge the entire balance sheet duration gap.

Question

Quizplus · Accepted Answer

The Answer of Which of the following is an example of microhedging asset-side portfolio risk?
A)When an FI, attempting to lock in cost of funds to protect itself against a rise in short-term interest rates, takes a short position in futures contracts on CDs.
B)FI manager trying to pick a futures contract whose underlying deliverable asset is not matched to the asset position being hedged.
C)When an FI hedges a cash asset on a direct dollar-for-dollar basis with a forward or futures contract.
D)When an FI manager wants to insulate the value of the institution's bond portfolio fully against a rise in interest rates.
E)When an FI manager wishes to use futures or other derivative securities to hedge the entire balance sheet duration gap.

Which of the Following Is an Example of Microhedging Asset-Side