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QUESTION 6A. OFF-BALANCE-SHEET BUSINESS (6 MARKS) Alpha Bank is considering the following 3-year interest rate swap contract with a face value of $5 million: Fixed

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QUESTION 6A. OFF-BALANCE-SHEET BUSINESS (6 MARKS) Alpha Bank is considering the following 3-year interest rate swap contract with a face value of $5 million: Fixed rate = 10% BUYER SELLER 90-day bank bill swap rate Alpha Bank is currently funding $5 million of 3-year variable-rate mortgage loans with 3-year fixed-rate bonds. To hedge its risk, should Alpha Bank enter the swap above as a buyer or seller? Explain your

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