13-60 When an FI pre?commits to lending at a fixed rate,it is exposed to

Question

Quizplus · Accepted Answer

When an FI pre-commits to lending at a fixed rate, it is exposed to interest rate risk. This means that if interest rates rise, the FI may be locked into lending funds at a lower fixed rate, resulting in a potential loss of income. Conversely, if interest rates decrease, the FI may be locked into lending funds at a higher fixed rate, resulting in a potential loss of profits.

13-60 When an FI Pre?commits to Lending at a Fixed