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6. Suppose that Bank C is offering the following deposit and mortgage rates to their customers: Maturity Deposit rate Mortgage rate 1 year 4% 6%

6. Suppose that Bank C is offering the following deposit and mortgage rates to their customers:

Maturity Deposit rate Mortgage rate

1 year 4% 6%

5 years 2% 5%

Assess the bank's interest rate risk when interest rates increase by 3% for the first two years and discuss a strategy to eliminate the risk if any

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