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SHOW ALL WORKING: Suppose a bank wishes to buy $150 million in interest-sensitive assets next month. Interest rates today on comparable deposits stand at 8%

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SHOW ALL WORKING: Suppose a bank wishes to buy $150 million in interest-sensitive assets next month. Interest rates today on comparable deposits stand at 8% but are expected to go to 7.25% next month. Concerned about the possible change management wishes to use a derivatives contract. What type of position would you recommend? If the bank does not cover the interest rate risk involved, how much in potential profits could the bank lose

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