After Conducting a Rate-Sensitive Analysis,a Bank Finds Itself with the Following

question 38

Multiple Choice

After conducting a rate-sensitive analysis,a bank finds itself with the following amounts of rate-sensitive assets and liabilities (RSAs and RSL) and fixed-rate assets and liabilities (FRAs and FRLs) ; the rate of return and cost rates on the accounts are also given: If the bank wishes to set up a swap to totally hedge the interest rate risk,the bank should

• A)pay a variable rate of interest and receive a fixed rate of interest.
• B)pay a fixed rate of interest and receive a variable rate of interest.
• C)pay a variable rate of interest and receive a variable rate of interest.
• D)pay a fixed rate of interest and receive a fixed rate of interest.
• E)None of the options are correct.

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Definitions:

Psychological Dependence

A form of dependence that involves emotional-motivational withdrawal symptoms upon cessation of drug use or behavior.

Therapeutic Uses

The application of treatments or medications aimed at curing, alleviating, or preventing diseases and disorders to improve the patient's health and quality of life.

Diuretics

Medications designed to increase urine production, aiding in removing excess fluid from the body.

Mannitol

A type of sugar alcohol used as a medication to reduce pressure in the brain, treat or prevent kidney failure, and as a diuretic.