Question
Risk Shifting can be done by using which of the
following financial instruments ?Solution
Risk shifting involves changing (“shifting”) the distribution of risky outcomes. It is different from Risk transfer which is passing on (“transferring”) risk to a third party. Both are risk mitigation strategies. Risk shifting is possible through the use of derivatives. For example, financial firms that do not want to bear currency risk on some foreign currency-denominated debt securities can use forward contracts or swaps to reduce or eliminate that risk. This is the way of changing the distribution of possible outcomes which is done through derivatives. Note - In some cases, risk transfer and risk shifting is also used interchangeably.
Which of the following does not fall under the category of commercial banks  ?
Which of the following Schemes allows the retail investors to Open & maintain retail Gilt account with RBI?
If the fixed cost is Rs.43,500 and the company, the contribution is Rs.500 per unit, how many unit sales would a company need to do to earn a profit of ...
In the Lead Bank Scheme circular, which committee’s recommendations were instrumental in the introduction of the Lead Bank Scheme?
What is the term used to describe the agencies that assist investors in making investments in shares, debentures, mutual funds, and other financial inst...
What does the acronym SIFTI stand for in the context of infrastructure project financing?
Which initiative aims to enable instant cross-border retail payments by interlinking domestic fast payments systems of ASEAN countries and India?
How much did the Reserve Bank of India approve to transfer as a dividend to the Government of India for FY24?
Under the revised framework for Commercial Papers (CPs), what is the requirement for settlement of primary issuance of CPs in terms of time?
How much did HDFC Bank sell its stake in Protean eGov Technologies for?
