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:

Specific Target Point

A clearly defined goal or objective that one party aims to achieve in a negotiation or a set of negotiations.

Resistance Point

The resistance point is the threshold in negotiations beyond which a party will not go; it represents the worst acceptable outcome.

Opening Bid

The initial proposal or offer made by one party to another at the beginning of a negotiation process.

Types of Goals

Various categories or classifications of objectives that individuals or organizations strive to achieve.