To manage interest rate risk, a savings institution could use
A)fixed-rate mortgages.
B)currency options.
C)interest rate futures contracts.
D)letters of credit.

Question

Quizplus · Accepted Answer

Interest rate futures contracts are financial derivatives that allow the holder to lock in a future interest rate, providing a direct method to hedge against the risk of fluctuating interest rates. Fixed-rate mortgages, currency options, and letters of credit do not directly manage interest rate risk in the same way.

To Manage Interest Rate Risk, a Savings Institution Could Use