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A bank finds that its assets are not matched with its liabilities. It is taking floating-rate...

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Finance

A bank finds that its assets are not matched with itsliabilities. It is taking floating-rate deposits and making fixed-rate loans. How can swaps be used to offset the risk?

Answer & Explanation Solved by verified expert
4.4 Ratings (741 Votes)
Since bank is accepting floating rate deposits and making fixed rate loans it is facing market fluctuation risk To avoid this risk bank should offer swap quotations and start accepting fixed rate deposits    See Answer
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