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Please show all work and answer clearly, thanks! A bank that expects interest rates to increase in the future will want to hold more rate-sensitive
Please show all work and answer clearly, thanks!
"A bank that expects interest rates to increase in the future will want to hold more rate-sensitive assets and fewer rate-sensitive liabilities." Do you agree with this statement? A. Disagree. In any case, it is more profitable for banks to reduce the number of rate-sensitive assets and liabilities, and increase assets and liabilities with fixed interest. B. Agree. Rate-sensitive assets will increase in value thus holding more of them as assets, while reducing them as liabilities, will decrease interest-rate risk. C. Disagree. Rate-sensitive assets will increase in value thus holding more of them as assets, while reducing them as liabilities, will decrease bank profits. D. Agree. Rate-sensitive assets will increase in value thus holding more of them as assets, while reducing them as liabilities, will increase bank profitsStep by Step Solution
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