In an interest rate swap, a bank whose liabilities are ____ rate sensitive than its assets can swap payments with a ____ interest rate in exchange for payments with a ____ interest rate.

Question

Quizplus · Accepted Answer

A bank whose liabilities are more rate sensitive than its assets would prefer to pay a fixed interest rate and receive a variable interest rate to hedge against interest rate fluctuations.

In an Interest Rate Swap, a Bank Whose Liabilities Are