If You Are Anticipating a Rising Interest Rate Environment, Your

question 68

Multiple Choice

If you are anticipating a rising interest rate environment, your planning and analysis of your loan and investment portfolio should focus on

• A) minimizing fixed rate investments and moving variable rate debt to fixed rate.
• B) investing in more fixed rate securities and moving variable rate debt to fixed rate.
• C) investing in preferred stock since the dividend rate is above the CD and bond interest rates.
• D) investing in CDs since they are insured by FDIC and minimizing borrowing.

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Definitions:

International Body

An organization composed of members from multiple countries created to address global issues and facilitate cooperation across borders.

GATT

General Agreement on Tariffs and Trade, an international treaty designed to reduce trade barriers and promote international commerce.

Unilateral Approach

A policy or action undertaken by a single government or organization independently, rather than by agreement with others.

Free Trade

An economic policy that allows imports and exports between countries with minimal or no barriers such as tariffs, quotas, or legislation.