If a Bank That Relies Heavily on Short-Term Deposits Expects

question 39

Multiple Choice

If a bank that relies heavily on short-term deposits expects interest rates to consistently decrease over time, it would allocate most of its loans with ____ rates if it desires to maximize its expected returns. It could reduce its exposure to interest rate risk by setting ____ rates on its loans.

• A)fixed; fixed
• B)variable; fixed
• C)variable; variable
• D)fixed; variable

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Definitions:

Cardiovascular Disease

A class of diseases that involve the heart or blood vessels, leading to various health complications.

Industrialized Countries

Nations that are characterized by a significant level of industrialization, advanced technological infrastructure, and higher living standards.

Heart Disease

Various disorders impacting the heart such as coronary artery disease, arrhythmias, and birth-related heart defects.

Stroke

A medical condition caused by the interruption of blood supply to part of the brain, leading to brain damage and various health complications.