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7. Banks borrow short and lend long; that is, their liabilities are mostly short-term deposits (with interest rates similar to short-term bond rate), and their
7. Banks borrow short and lend long; that is, their liabilities are mostly short-term deposits (with interest rates similar to short-term bond rate), and their assets are mostly long-term loans (with interest rates similar to longterm bond rates). With that in mind, explain why a banker would prefer a steep yield curve to a flat one.
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