Which of the following statements is NOT correct?

Select one:

a.

Treasurer of Banks generally take positions in multiple currencies and can hedge FX risk exposure if foreign currencies are perfectly positively correlated.

b.

A treasurer can hedge FX risk exposure by on-balance-sheet and off-balance-sheet hedging.

c.

If interest rate parity works, FIs cannot generate any arbitrage profit by making investments in foreign countries that offer a higher interest rate.

d.

Violation of interest rate parity implies currencies are plausibly overvalued or undervalued.

e.

On-balance-sheet hedging involves matching duration and making changes in the on-balance-sheet assets and liabilities to protect FI profits from FX risk.