Question: A financial institution that has a negative interest-sensitive gap is more likely to use _________ to protect against potentially lower net interest income: A. A

A financial institution that has a negative interest-sensitive gap is more likely to use _________ to protect against potentially lower net interest income:

A. A long hedge

B. A short hedge

C. A put option

D. Either A or C

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

7. When the futures contract is created: a. Seller is making a purchase and investing the amount of the contract in an actual security b. The buyer is purchasing a call option c. Neither the buyer...

1. If a bank has a negative IS gap and interest rates are rising, management's most possible response is to: a. Increase interest-sensitive liabilities or decrease interest-sensitive assets b....

The most typical interest-rate hedging problem financial institutions face is: Avoiding a fall in interest returns expected from loans and security holdings Avoiding a negative interest-sensitive gap...

Which one of the following is not an example of repriceable interest-sensitive asset? Cash. Variable rate loans. Short-term securities. Federal funds sold. An asset-sensitive financial institution...

If a bank has a negative IS gap and interest rates are rising, managements most possible response is to: a. Increase interest-sensitive liabilities or decrease interest-sensitive assets b. Increase...

An asset-sensitive financial institution will typically hedge its position to avoid lower net interest income by: Using an interest rate cap. Executing a long hedge. Using an interest rate collar....

Multichoice question: Plz answer all. thanks Question 1: Countercyclical capital buffers may be: a. Set to zero by the bank regulator during periods where the risks to the financial system are judged...

1. What is it that a bank wishes to protect from adverse movements in interest rates? 2. What is the goal of hedging in banking? 3. What is the concept of gap management? 4. How is a bank's duration...

It is becoming widely expected that interest rates will rise in the coming year. In recent weeks the 10 year US bond has risen from about 1.50% to 1.80%. Using the appendix for chapter 2 on Webster...

a. What disclosures are lessees required to make? b. What disclosures are lessors required to make for various types of leases?

Individuals are less willing to cooperate with surveys today than they were 15 years ago. Comment on this statement.

1. Using the three characteristics of monopoly, explain why each of the following is a monopolist: a. Local telephone company b. San Francisco 49ers football team c. U.S. Postal Service

Which of the following are problems with identifying users of ABC? Multiple select question. ABC means different things to different organizations. Organizations will announce the discontinuance of...

cultural empathy: sensitivity to other cultures and a non-judgmental understanding of other cultures is probably essential;

diplomatic skills: an ability to deal with others, negotiate and to represent the parent company on foreign assignment; this may even involve interaction with politicians and government officials in...

adaptability and flexibility: this includes the ability to integrate with other people and other cultures and different types of business operations; being adaptable to change; having the ability to...