Which of the following is a technique that an institution with rate-sensitive liabilities could perform in order to reduce interest rate risk?
A) Using an interest-rate swap
B) Making more short-term loans
C) Issuing long-term certificates of deposit
D) All of the given answers

Question

Quizplus · Accepted Answer

All the given answers are techniques that an institution with rate-sensitive liabilities could use to reduce interest rate risk. Interest-rate swaps can be used to exchange variable interest rate payments for fixed-rate payments, making more short-term loans can help align the interest sensitivity of assets with that of liabilities, and issuing long-term certificates of deposit can lock in funding costs, reducing the risk of rising interest rates.

Which of the Following Is a Technique That an Institution