In each of the following cases, identify what risk the manager of an FI faces and whether that risk should be hedged by buying a put or a call option.

a. A commercial bank holds three-month CDs in its liability portfolio.

b. An insurance company plans to buy bonds in two months.

c. A savings bank plans to sell Treasury securities it holds in its investment portfolio next month.

d. A U.S. bank lends to a French company with the loan payable in euros.

e. A mutual fund plans to sell its holding of stock in a British company.

f. A finance company has assets with a duration of six years and liabilities with a duration of 13 years.