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A bank is concerned with run offs in the upcoming year due to an expected interest rate decline driven by the FED's monetary policy. Currently
A bank is concerned with run offs in the upcoming year due to an expected interest rate decline driven by the FED's monetary policy. Currently the bank's risk sensitive assets are more than the risk sensitive liabilities, therefore the bank should Sell the risk sensitive assets such as callable bonds and invest in long term plain vanilla bonds O Invest in more of the risk sensitive assets such as callable bonds and sell long term plain vanilla bonds O There is nothing the bank can do O Open more CDs for their customers at on going competitive interest rate
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