Multiple Choice
Suppose the bank has a positive duration gap and interest rates are expected to rise in the
Near future. The bank could hedge this interest rate risk by:
A) buying a call option
B) selling a call option
C) selling a put option
D) none of the above; the bank has no interest rate risk because its interest rate margin will increase as rates rise
Correct Answer:
Verified
Correct Answer:
Verified
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