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Assume that a bank obtains most of its funds from large CDs with a one year maturity. Its assets are in the form of loans

Assume that a bank obtains most of its funds from large CDs with a one year maturity. Its assets are in the form of loans with rates that adjust every six months. The bank would be _______ affected if interest rates increase. To partially hedge its position, it could _______ futures contracts.

adversely; purchase

favorably; sell

favorably; purchase

adversely; sell

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