If a bank expects interest rates to consistently ____ over time, it will consider allocating most funds to rate-____ assets.
A)decrease; sensitive
B)decrease; insensitive
C)increase; insensitive
D)None of these are correct.

Question

Quizplus · Accepted Answer

If a bank expects interest rates to decrease over time, it will prefer to allocate most funds to rate-insensitive assets to protect its returns from the adverse effects of falling rates.

If a Bank Expects Interest Rates to Consistently ____ Over