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A commercial bank tends to have long-term illiquid assets funded by short-term liabilities. To protect the equity value of the bank, a risk manager may
A commercial bank tends to have long-term illiquid assets funded by short-term liabilities. To protect the equity value of the bank, a risk manager may engage in which of the following?
A. A SWAP contract to pay floating and receive a fixed rate.
B. Buying a cap on interest rates.
C. Buy futures contracts on Treasury bonds..
D. None of the above.
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