Chapter 20 Flashcards

1
Q

Liability hedging

A

Where assets are chosen in such a way as to perform in the same way as liabilities

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2
Q

Advantages of cashflow matching using bonds and swaps

A

Maturity
Liquid
Transaction
Geared
OTC

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3
Q

Disadvantages of cashflow matching using bonds and swaps

A

Costly
Margin
OTC
Counterparty
Basis risk

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