One Way That Banks Can Reduce the Duration of Their

question 37

Multiple Choice

One way that banks can reduce the duration of their asset portfolios is through the use of

• A)fixed rate mortgages.
• B)adjustable rate mortgages.
• C)certificates of deposit.
• D)short-term borrowing.
• E)none of the above.

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Definitions:

Pure Monopolist

A market participant that has complete control over the market for a particular good or service, with no close substitutes.

Profit-Maximizing Quantity

The level of output at which a company can achieve the highest profit, where marginal cost is equal to marginal revenue.

Price Discriminate

The practice of selling the same product to different consumers at different prices based on what each is willing to pay.

Pure Monopolist

A single seller in a market who has complete control over the supply of a product and its price, with no close substitutes available.