A Bank Makes Long-Term Fixed-Rate Loans, and Funds Itself with Short-Term

Multiple Choice

A bank makes long-term fixed-rate loans, and funds itself with short-term deposits. It can best manage its vulnerability to interest rate changes by

A) Entering into a basis (floating-floating) swap.
B) Entering into a pay-floating/receive-fixed interest rate swap.
C) Entering into a pay-fixed/receive-floating interest rate swap.
D) Entering into a fixed-fixed swap where the two legs have different payment frequencies.