Financial derivatives in reducing interest rate risk

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1. What kind of financial risks are present in online lending? What could be the effects on an economy’s financial stability, if the practice of marketplace lending substantially increases?

2. Briefly describe the use of financial derivatives in reducing interest rate risk. (just a short simple answer please)

3. Discuss Contango and Backwardation. Provide an example of how you would trade a futures contract that is in Contango.

4. If the fed is targeting interest rates and money demand increases, an appropriate policy response would be to

A. increase reserve requirements

B increase the discount rate

C. buy U.S. treasury securities from government bond dealers

D. increase government spending

E. none of the options

Reference no: EM131854842

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