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A Bank with Long-Term Fixed-Rate Assets Funded with Short-Term Rate-Sensitive

question 60

Multiple Choice

A bank with long-term fixed-rate assets funded with short-term rate-sensitive liabilities could do which of the following to limit their interest rate risk?
I. Buy a cap.
II. Buy an interest rate swap.
III. Buy a floor.
IV. Sell an interest rate swap.


Definitions:

Variable

An attribute or detail that can change or alter.

Time Periods

Specific intervals or periods used for analysis or measurement in temporal data or time series analysis.

Cumulative Relative Frequency

A measure used in statistics to represent the sum of relative frequencies up to a certain class or level.

Electronics Company

A business entity that specializes in the manufacture, design, marketing, or sale of electronic goods and devices.

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