An FI with DA < KDL May Choose to Enter

question 30

True/False

An FI with DA < kDL may choose to enter into a long-term swap in which it pays a fixed rate of interest and receives a variable rate in order to effectively reduce the duration gap.

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Definitions:

Assignment

The transfer of rights, property, or obligations from one party to another.

Negotiation

The process of discussing something formally to reach an agreement or compromise between parties.

Fraudulent

Fraudulent activities involve deceit or trickery, intentionally carried out for personal gain or to cause financial or personal harm to others.

Demand Instrument

A financial document that requires payment of the amount specified on it upon demand by the holder.