If the Maturity of a Bank's Assets Is Much Longer

question 27

Multiple Choice

If the maturity of a bank's assets is much longer than the maturity of its liabilities and it wants to limit its interest rate risk, the bank may ________.

• A) prefer to invest in long-term bonds in its asset portfolio
• B) prefer to invest in equities in its asset portfolio
• C) prefer to invest in variable-rate assets
• D) decide to increase its fixed-rate mortgage holdings