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A bank has an average duration of its liabilities equal to 2 years. The bank's average duration of its assets is 3.5 years. The bank's

A bank has an average duration of its liabilities equal to 2 years. The bank's average duration of its assets is 3.5 years. The bank's interest rate risk increases if _______________________.

Interestratesfall

Interest rates increase

Prices of fixed-income securities increase

Prices of zero-coupon bonds increase

None of the above

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