An FI that matches the maturities of its assets and liabilities is perfectly hedged against interest rate risk.

Name: An FI that matches the maturities of its assets and liabilities is perfectly hedged against interest rate risk.
Brand: Quizplus
Rating: 4.7 (44 reviews)

Question

Quizplus · Accepted Answer

Matching the maturities of assets and liabilities can reduce interest rate risk but does not perfectly hedge against it, as it does not account for the differences in the sensitivity of asset and liability values to interest rate changes (duration mismatch).

An FI That Matches the Maturities of Its Assets and Liabilities