A Eurozone-Based Bank That Is Liability-Sensitive to Market Interest Rate

question 177

Multiple Choice

A Eurozone-based bank that is liability-sensitive to market interest rate changes might reduce interest rate risk by:

• A) entering into a pay fixed I receive variable standard interest rate swap
• B) entering into a receive fixed I pay variable amortizing interest rate swap
• C) entering into a EUR/USD FX swap
• D) entering into a receive fixed I pay variable standard interest rate swap

---

Definitions:

Ontological Argument

A philosophical argument for the existence of God based on the premise that the very concept or definition of God necessitates His existence.

Perfection

The condition, state, or quality of being free from all flaws or defects.

Moral Evil

Wrong or harm arising from intentional actions or character flaws of moral agents, contrasted with evil resulting from natural processes or accidents.

Free Will

Among philosophers, a somewhat antiquated expression (as in “he did it of his own free will”) meaning that a person is capable of making decisions that are not determined by antecedent conditions. Of course, there may be antecedent considerations, such as what a person wants or what a person believes, but free will means that such considerations never determine a person’s decision. At most they “enter into the decision.”