A bank has a positive repricing gap and wishes to protect its profits from an unfavorable interest rate move. Purchasing a cap will help limit this bank's interest rate risk.
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Q8: Basis risk is the risk that the
Q14: Swaps and forwards are subject to contingent
Q15: Buying a cap is similar to buying
Q16: As interest rates fall,bond prices and call
Q17: Forward contracts are not subject to default
Q20: Writing a call option on a bond
Q21: A macrohedge is a
A)hedge of a particular
Q22: Basis risk occurs because it is generally
Q23: For a bond put option,the _ the
Q24: The profits on a derivatives position are
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