The ____ of CD futures ____ the potential adverse effect of rising interest rates on a bank's interest expenses.

Question

Quizplus · Accepted Answer

Selling CD futures can help reduce the adverse effect of rising interest rates on a bank's interest expenses as it allows the bank to lock in a fixed interest rate, thereby reducing its exposure to interest rate risk. Purchasing CD futures would have the opposite effect and increase the bank's exposure to interest rate risk. Therefore, only option B is correct.

The ____ of CD Futures ____ the Potential Adverse Effect

The of CD Futures the Potential Adverse Effect