The Following Information Is About Current Spot Rates for Second

Multiple Choice

The following information is about current spot rates for Second Duration Savings' assets (loans) and liabilities (CDs) . All interest rates are fixed and paid annually $$\begin{array} { | c | c | } \hline \text { Assets } & \text { Liabilities } \\\hline \text { 1-year loan rate: } 7.50 \text { percent } & \text { 1-year CD rate: } 6.50 \text { percent } \\\hline \text { 2-year loan rate: } 8.15 \text { percent } & \text { 2-year CD rate: } 6.65 \text { percent } \\\hline\end{array}$$
-If rates do not change, the balance sheet position that maximizes the FI's returns is

A) a positive spread of 15 basis points by selling 1-year CDs to finance 2-year CDs.
B) a positive spread of 100 basis points by selling 1-year CDs to finance 1-year loans.
C) a positive spread of 85 basis points by financing the purchase of a 1-year loan with a 2-year CD.
D) a positive spread of 165 basis points by selling 1-year CDs to finance 2-year loans.
E) a positive spread of 150 basis points by selling 2-year CDs to finance 2-year loans.