22-100 If the portfolio manager wants to shorten the bank's asset maturity,what type of risk is she concerned about?
A)Credit risk.
B)Foreign exchange rate risk.
C)The risk of rising interest rates.
D)The risk of falling interest rates.
E)Default risk.

Question

Quizplus · Accepted Answer

Shortening the asset maturity of a bank's portfolio manager is concerned about the risk of rising interest rates. When interest rates rise, the bank may have to reinvest the proceeds from maturing assets at lower rates, which can lead to a decrease in profitability. By shortening the maturity of the assets, the portfolio manager can mitigate this risk.

22-100 If the Portfolio Manager Wants to Shorten the Bank's