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A bank obtains a significant portion of its funds from large CDs with a maturity of 5 years, and most of its assets represent loans
A bank obtains a significant portion of its funds from large CDs with a maturity of 5 years, and most of its assets represent loans with rates that adjust every 6 months. Why would this bank be adversely affected by a decline rather than an increase in interest rates? How should this bank hedge against the possibility of lower interest rates?
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