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My Bank Has a Larger Number of Adjustable-Rate Mortgage Loans

Question 33

Multiple Choice

My bank has a larger number of adjustable-rate mortgage loans outstanding. To protect our interest rate income on these loans,the bank could
I. enter into a swap to pay fixed and receive variable.
II. enter into a swap to pay variable and receive fixed.
III. buy an interest rate floor.
IV. buy an interest rate cap.


A) I and III only
B) I and IV only
C) II and III only
D) II and IV only

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