If Second Bank Has More Rate-Sensitive Liabilities Then Rate-Sensitive Assets

question 90

Multiple Choice

If Second Bank has more rate-sensitive liabilities then rate-sensitive assets, it can reduce interest rate risk with a swap which requires Second Bank to ________.

• A) pay a fixed rate while receiving a floating rate
• B) receive a fixed rate while paying a floating rate
• C) both receive and pay a fixed rate
• D) both receive and pay a floating rate

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Definitions:

Toussaint Louverture

A leader of the Haitian Revolution, who played a key role in the country’s fight for independence from France, becoming a symbol of the struggle against slavery.

Quasi War

An undeclared naval conflict between the United States and France from 1798 to 1800, arising from disputes over treaties and naval harassment.

Undeclared

Refers to a situation or status not officially announced or confirmed, often used in the context of wars, intentions, or academic majors.

Franchise

Franchise, in the context of politics, refers to the right to vote in public elections, an essential element of democratic governance and citizen participation.