An FI with D_A > KD_L Could Do Which of the Following

question 19

Multiple Choice

An FI with D_A > kD_L could do which of the following to reduce the duration gap?

• A)Engage in a swap and pay a variable rate and receive a fixed rate of interest
• B)Sell bond futures contracts
• C)Buy bonds forward
• D)Buy bond call options
• E)None of the options

---

Definitions:

Secondary Operations

Processes that are performed after the primary manufacturing or production process to add value to a product, such as finishing, painting, or assembly.

Periodic Inventory System

An inventory accounting system where stock levels and cost of goods sold are determined at the end of an accounting period through a physical count.

Inventory Record

Documentation that tracks the quantity, location, and status of products throughout the supply chain from acquisition to sale.

Inventory Items

These are goods and materials held by a business for the purpose of resale or as inputs in the production process.