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Appropriate for an fi to buy or sell a forward contract

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Reference no: EM132611807

In each of the following cases, indicate whether it would be appropriate for an FI to buy or sell a forward contract to hedge the appropriate risk. Explain your answer

a. A commercial bank holds 3-month CDs in its liability portfolio.

b. An insurance company plans to buy bonds in two months.

c. A savings bank is going to sell Treasury securities it holds in its investment portfolio next month.

d. A U.S. bank lends to a French company. The loan is payable in euros.

e. A finance company has assets with a duration of 6 years and liabilities with a duration of 13 years.

Reference no: EM132611807

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