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A bank has issued a one - year certificate of deposit for $ 5 0 million at an interest rate of 2 percent. With the

A bank has issued a one-year certificate of deposit for $50 million at an interest rate of 2
percent. With the proceeds, the bank has purchased a two-year Treasury note that pays 4
percent interest. What risk does the bank face in entering into these transactions? What
would happen if interest rates were to rise by 1 percent? Show your calculations

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