A Risk a Bank Takes on by Offering Long-Term Fixed

question 17

Multiple Choice

A risk a bank takes on by offering long-term fixed interest rate loans is:

• A) the loss of real returns due to anticipated inflation
• B) the gain that could be made from offering short-term loans
• C) the loss of real returns due to an unexpected inflation surprise
• D) the gains that could have been made if the money were invested in an alternative asset
• E) the loss of customers wanting flexible interest loans