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

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

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free