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The following shows the balance sheet for a bank. The manager wants to get an idea about the interest rate risk faced by her bank. She asks the research staff to conduct a basic gap analysis. She is a bit worried about the interest rate risk (because her job depends on how successfully she manages this risk). As a member of the research staff, which of the following actions would you recommend to be taken to reduce the interest rate risk? Assets ($million) Liabilities & NW ($million) $100 Rate Sensitive Assets $40 Rate Sensitive Liabilities Variable-rate CDs Variable-rate loans Money market deposit accounts Short-term loans Short-term securities $50 $110 Fixed-Rate Liabilities Fixed-Rate Assets Checkable deposits Reserves Savings deposits Long-term loans ndf There are more than one correct answer. Reduce the amounts of long-term CDs and issue more money market deposit accounts. Try to reduce your variable-rate CDs and issue more saving accounts. Try to reduce your long-term loans and increase your short-term loans. Try to reduce your short-term loans and increase your long-term loans. Sell some of your long-term securities and use the proceeds to buy short-term securities. Reduce the amounts in money market deposit accounts and issue more long-term CDs. Try to reduce the amount of savings deposits and issue additional variable-rate CDs. Sell some of your short-term securities and use the proceeds to buy long-term securities

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