A bank will use a short hedge in the futures market to avoid higher borrowing costs or to protect against declining asset values.

Question

Quizplus · Accepted Answer

A bank can use a short hedge in the futures market to lock in interest rates, protecting against higher borrowing costs, or to protect against declining asset values. This is done by selling futures contracts, which act as a form of insurance against potential losses.

A Bank Will Use a Short Hedge in the Futures