When the Assets and Liabilities of an FI Are Not

question 72

Multiple Choice

When the assets and liabilities of an FI are not equal in size,efficient hedging of interest rate risk can be achieved by

• A)increasing the duration of assets and increasing the duration of equity.
• B)issuing more equity and reducing the amount of borrowed funds.
• C)not exactly matching the maturities of assets and liabilities.
• D)issuing more equity and investing the funds in higher-yielding assets.

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