22-64 What is overhedging?
A)Selectively hedging a proportion of an FI's balance sheet position.
B)Choosing to bear some interest rate risk as well as credit and FX risks.
C)Reducing the risk to the lowest level possible.
D)Using more hedge vehicles than is necessary to offset the risk in the cash asset.
E)Partially hedging the individual assets and liabilities.

Question

Quizplus · Accepted Answer

Overhedging refers to using more hedge vehicles than is necessary to offset the risk in the cash asset. This can result in additional costs and may not always provide the intended level of risk reduction.

22-64 What Is Overhedging