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Federal Reserve Bank of Kansas City
Economic Review
New methods for savings and loans to hedge interest rate risk
Charles S. Morris
Thomas J. Merfeld
Abstract

Increased interest rate volatility in recent years has led to a greater volatility in profits at savings and loan associations. To help stabilize their profits, some S&L's are implementing interest rate hedging programs. These programs use financial instruments such as interest rate swaps, financial futures and options on financial futures. Because hedging programs introduce their own risks, S&L's should thoroughly examine all aspects of the programs before employing them.


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Charles S. Morris & Thomas J. Merfeld, "New methods for savings and loans to hedge interest rate risk" , Federal Reserve Bank of Kansas City, Economic Review, issue Mar, pages 3-15, 1988.
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Keywords: Hedging (Finance) ; Savings and loan associations ; Interest rates
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