A Bank Has Liabilities of $4 Million with an Average

Multiple Choice

A bank has liabilities of $4 million with an average maturity of two years paying interest rates of 4 per cent annually.It has assets of $5 million with an average maturity of five years earning interest rates of 6 per cent annually.To what risk is the bank exposed?

A) reinvestment risk
B) refinancing risk
C) interest rate risk
D) refinancing risk and interest rate risk