Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. a savings and loan institution has long-term fixed

A savings and loan institution has long-term fixed-rate mortgages supported by short-term funds. A put...

70.2K

Verified Solution

Question

Accounting

A savings and loan institution has long-term fixed-rate mortgages supported by short-term funds. A put option on Treasury bond futures could be used to (ignore the premium paid for the option when you answer this question)?

a. maintain its interest rate spread if interest rates rise, and increase its spread if interest rates fall.

b. maintain its interest rate spread if interest rates fall, and increase its spread if interest rates rise.

c. maintain its interest rate spread whether interest rates rise or fall.

d. increase its interest rate spread whether interest rates rise or fall.

Ans: B, Maintain its interest rate spread if interest rates fall, and increase its spread if interest rates rise.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students