Question 9 (22 marks) In each of the following cases in part (a) to (e), suggest the most appropriate way for the respective FIs to hedge the appropriate risk. The only derivatives you can use are bond forwards and foreign currency forwards. Explain your answer. No calculation is need. a) A commercial bank holds three-month CDs in its liability portfolio. (4 marks) b) An insurance company plans to buy bonds in two months. (4 marks) c) A savings bank is going to sell Treasury securities it holds in its investment portfolio next month. (4 marks) d) A U.S. bank lends to a French company. The loan is payable in euros. (4 marks) e) A finance company has assets with a duration of six years and liabilities with a duration of (4 marks) 14 years. f) State TWO of the major differences between forwards and futures contract? (2 marks) Question 9 (22 marks) In each of the following cases in part (a) to (e), suggest the most appropriate way for the respective FIs to hedge the appropriate risk. The only derivatives you can use are bond forwards and foreign currency forwards. Explain your answer. No calculation is need. a) A commercial bank holds three-month CDs in its liability portfolio. (4 marks) b) An insurance company plans to buy bonds in two months. (4 marks) c) A savings bank is going to sell Treasury securities it holds in its investment portfolio next month. (4 marks) d) A U.S. bank lends to a French company. The loan is payable in euros. (4 marks) e) A finance company has assets with a duration of six years and liabilities with a duration of (4 marks) 14 years. f) State TWO of the major differences between forwards and futures contract? (2 marks)