Question
There is a bank that accepts fixed-rate deposits and provides loans with variable interest rates. The bank wants to use swaps to convert both its
There is a bank that accepts fixed-rate deposits and provides loans with variable interest rates. The bank wants to use swaps to convert both its assets and liabilities to fixed interest rates. What is the correct way to do this?
1. Convert liabilities to fixed interest rates through a swap that pays floating interest rates and receives fixed interest rates.
O 2. Convert ssets to fixed interest rates through a swap that pays floating interest rates and receives fixed interest rates.
O 3. There is no correct answer.
4. Convert assets to fixed interest rates through a swap that receives floating interest rates and pays fixed interest rates.
O 5. Convert liabilities to fixed interest rates through a swap that receives floating interest rates and pays fixed interest rates.
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