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.

• A)I and II only
• B)III only
• C)I and IV only
• D)II and III only
• E)III and IV only

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