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An FI Has Long-Term Fixed-Rate Assets Funded by Short-Term Variable-Rate

Question 12

Multiple Choice

An FI has long-term fixed-rate assets funded by short-term variable-rate liabilities. To protect the equity value,the FI may engage in a swap to pay a ________ rate and receive a ________ interest.


A) fixed; variable
B) variable; variable
C) variable; fixed
D) fixed; fixed
E) None of the options are correct.

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