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Associated Bank's management team has determined that market interest rates are going to decrease dramatically. They need to sell a portion of their bond portfolio
Associated Bank's management team has determined that market interest rates are going to decrease dramatically. They need to sell a portion of their bond portfolio for liquidity purposes to meet depositors' needs for the coming quarter. However, the bonds they wish to sell if held for the next few months could be sold for a profit. This bank has a positive Duration GAP. How could the bank use interest rate derivatives to get their liquidity and profit from the bonds?
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