The student loan association raises floating-rate financing and makes loans of maturity 510 years at fixed rates.
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The student loan association raises floating-rate financing and makes loans of maturity 5–10 years at fixed rates. Can you describe the nature of the risks on the balance sheet? What financial contract should the association undertake to mitigate these risks?
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The student loan association faces gap risk since it borrows shortterm at floatin...View the full answer
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