Question: How do banks manage interest rate risk? Banks perform basic gap analysis, which compares a bank's interest rate risk - sensitive assets and liabilities. Banks

How do banks manage interest rate risk?
Banks perform basic gap analysis, which compares a bank's interest rate risk-sensitive assets and liabilities.
Banks perform duration analysis, which accounts for the fact that bank assets and liabilities have different maturities.
Banks hedge against interest rate risk by trading derivatives, Fike swaps and futures, and engaging in other off-balance-sheet activities.
All of the above.
How do banks manage interest rate risk? Banks

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!