If a bank has assets and liabilities in dollars and euros, its exposure to interest rate risk can best be minimized if the

Question

Quizplus · Accepted Answer

Matching the rate sensitivity of assets and liabilities for each currency will help minimize the exposure to interest rate risk. This means that the bank will have separate strategies for managing interest rate risk for each currency, rather than just looking at the overall mix of assets and liabilities. This approach takes into account the unique characteristics of each currency and helps to minimize the risk of unexpected changes in interest rates.

If a Bank Has Assets and Liabilities in Dollars and Euros