Interest rate risk may be reduced by using which of the following?
A)adjustable-rate loans
B)better credit analysis
C)nondeposit liabilities
D)only fixed-rate loans

Question

Quizplus · Accepted Answer

Adjustable-rate loans can reduce interest rate risk because the interest rate on these loans adjusts with market rates, thereby aligning the interest income of a financial institution with its interest expenses and mitigating the impact of rate fluctuations.

Interest Rate Risk May Be Reduced by Using Which of the Following