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Financial Institutions That Hold Fixed-Rate Mortgages in Their Asset Portfolios

Question 24

Multiple Choice

Financial institutions that hold fixed-rate mortgages in their asset portfolios are exposed to ____ risk, because they commonly use funds obtained from short-term customer deposits to make long#NAME?erm mortgage loans.


A) exchange rate
B) prepayment
C) reinvestment rate
D) interest rate
E) exchange rate.

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