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A bank finds that its assets are not matched with its liabilities. It is taking floating rate deposits and making fixed-rate loans. How can swaps
A bank finds that its assets are not matched with its liabilities. It is taking floating rate deposits and making fixed-rate loans. How can swaps be used to offset the risk? Come up with a numerical example that shows how the swap offsets the risk. Answer to first question: It can offset its risk by entering into interest rate swaps (with other financial Institutions or corporations) in which it contracts to pay fixed and receive floating
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