One Way for a Bank to Reduce Interest Rate Risk

question 51

Multiple Choice

One way for a bank to reduce interest rate risk is by making

• A)long-term, fixed-rate loans while issuing short-term, variable-rate liabilities.
• B)short-term, variable-rate loans, while issuing long-term, fixed-rate liabilities.
• C)long-term, adjustable-rate loans while issuing short-term, variable-rate liabilities.
• D)short-term, fixed-rate loans while issuing long-term, variable-rate liabilities.

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Definitions:

Globalization

The process of interaction and integration among people, companies, and governments worldwide, resulting in increased interconnectedness and interdependence.

Subsidies

Financial support provided by the government to individuals, businesses, or institutions to encourage certain activities or reduce the cost of products.

GDP

Gross Domestic Product, a measure of the economic performance of a country, calculated by adding the total value of all goods and services produced within its borders over a specific time period.

Domestic Output

The total value of goods and services produced within a country's borders in a specific time period.