Question :In this unit we learned to illustrate the investment characteristics of put and call options and how they can be used to modify the risk and return characteristics of an investment portfolio. We also examined the usefulness of futures contracts as investment vehicles for both hedgers and speculators, showed how interest rate differentials among the countries determine foreign currency exchange rates, and investigate how global firms use currency futures to manage foreign currency risk.
so please answer this question below
Lets extend the discussion by examining the practical implications of these concepts.
A bank ?nds that its assets are not matched with its liabilities.
It is taking ?oating-rate deposits and making ?xed-rate loans. How can swaps be used to o?set the risk?