Discussion: Risk Management
Financial institutions use derivatives instruments to hedge their asset-liability risk exposures. The financial institutions` goal is to reduce the value of their net worth that is at risk due to adverse events.
• What are the reasons why a financial institution may choose to hedge its portfolio selectively?
• Substantiate your response with examples.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.