Banks use financial derivatives for all of the following except:
A) hedge asset yields.
B) adjust maturities by creating synthetic liabilities.
C) adjust the sensitivity of earnings to changes in interest rates.
D) lock-in the cost of liabilities.
E) Banks use financial derivatives for all of the above.

Question

Quizplus · Accepted Answer

Financial derivatives are versatile tools that banks use for various purposes, including hedging asset yields, adjusting maturities through synthetic liabilities, managing the sensitivity of earnings to interest rate changes, and locking in the cost of liabilities. Therefore, all the options listed are correct uses of financial derivatives by banks.

Banks Use Financial Derivatives for All of the Following Except