If Friendly Finance Company has more rate-sensitive assets than rate-sensitive liabilities,it may reduce risk with a swap.

Question

Quizplus · Accepted Answer

By entering into a swap, Friendly Finance Company can exchange its rate-sensitive assets for fixed-rate assets, reducing its exposure to interest rate fluctuations. This will help reduce risk if the company has more rate-sensitive assets than rate-sensitive liabilities.

If Friendly Finance Company Has More Rate-Sensitive Assets Than Rate-Sensitive