A commercial bank recognizes that its net income suffers whenever interest rates increase.
Which of the following strategies would protect the bank against rising interest rates?
- Entering into an interest rate swap where the bank receives a fixed payment stream, and in return agrees to make payments that float with market interest rates.
- Purchase principal only (PO) strips that decline in value whenever interest rates rise.
- Enter into a short hedge where the bank agrees to sell interest rate futures.
- Sell some of the bank’s floating-rate loans and use the proceeds to make fixed-rate loans.
- Buying inverse floaters
Are you looking for a similar paper or any other quality academic essay? Then look no further. Our research paper writing service is what you require. Our team of experienced writers is on standby to deliver to you an original paper as per your specified instructions with zero plagiarism guaranteed. This is the perfect way you can prepare your own unique academic paper and score the grades you deserve.
Use the order calculator below and get started! Contact our live support team for any assistance or inquiry.[order_calculator]