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If the maturity of a bank's assets is much longer than the maturity of its liabilities and it wants to limit its interest rate risk the bank may _________.a. prefer to invest in long term bonds in its asset portfoliob. prefer to invest in equities in its asset portfolioc. prefer to invest in variable rate assetsd. decide to increase its fixed rate mortgage holdings

Respuesta :

Answer:

The correct option is (c). prefer to invest in variable rate assets

Explanation:

According to the given scenario, in the case when the asset of the bank has the maturity and i.e. longer than the liabilities maturity also at the same time it wants to limit the risk of the rate of the interest so here the bank would prefer to invest in the asset i.e. variable rate as it represents a frontier that limits the risk of the  rate of interest for the bank

Therfore the correct option is (c)

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