If Second National Bank has more rate-sensitive liabilities then rate-sensitive assets,it can reduce interest rate risk with a swap that requires Second National to
A)pay fixed rate while receiving floating rate.
B)receive fixed rate while paying floating rate.
C)both receive and pay fixed rate.
D)both receive and pay floating rate.

Question

Quizplus · Accepted Answer

By paying a fixed rate and receiving a floating rate, Second National Bank can offset the risk of rising interest rates, which would increase the cost of its rate-sensitive liabilities.

If Second National Bank Has More Rate-Sensitive Liabilities Then Rate-Sensitive