The following information is about current spot rates for Second Duration Savings' assets (loans) and liabilities (CDs) . All interest rates are fixed and paid annually. 
If rates do not change, the balance sheet position that maximizes the FI's returns is
A) a positive spread of 15 basis points by selling 1-year CDs to finance 2-year CDs.
B) a positive spread of 100 basis points by selling 1-year CDs to finance 1-year loans.
C) a positive spread of 85 basis points by financing the purchase of a 1-year loan with a 2-year CD.
D) a positive spread of 165 basis points by selling 1-year CDs to finance 2-year loans.
E) a positive spread of 150 basis points by selling 2-year CDs to finance 2-year loans.
Correct Answer:
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