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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