In each of the following cases, identify what risk the manager of an FI faces and whether the risk should be hedged by buying a put or a call option.
a. A commercial bank plans to issue CDs in three months.
b. An insurance company plans to buy bonds in two months.
c. A thrift plans to sell Treasury securities next month.
d. A U. S. bank lends to a French company with the loan payable in euros.
e. A mutual fund plans to sell its holding of stock in a British company.
f. A finance company has assets with a duration of six years and liabilities with a duration of 13 years.

  • CreatedJanuary 27, 2015
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