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An insurance company makes long-term loans with variable interest rates. It funds the loans by issuing guaranteed investment contracts (GICs) that pay a fixed rate.

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An insurance company makes long-term loans with variable interest rates. It funds the loans by issuing guaranteed investment contracts (GICs) that pay a fixed rate. The interest rate paid on loans is adjusted annually. The insurance company could hedge its interest rate risk by purchasing an interest rate swap where it pays a fixed rate of interest and receives a floating rate. O True O False

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