Bank that expects interest rates to increase in the future

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Reference no: EM131532372

"A bank that expects interest rates to increase in the future will want to hold more rate-sensitive assets and fewer rate-sensitive liabilities." Do you agree with this statement?

A. Disagree. In any case, it is more profitable for banks to reduce the number of rate-sensitive assets and liabilities, and increase assets and liabilities with fixed interest.

B. Agree. Rate-sensitive assets will increase in value thus holding more of them as assets, while reducing them as liabilities, will decrease interest-rate risk.

C. Disagree. Rate-sensitive assets will increase in value thus holding more of them as assets, while reducing them as liabilities, will decrease bank profits.

D. Agree. Rate-sensitive assets will increase in value thus holding more of them as assets, while reducing them as liabilities, will increase bank profits.

Reference no: EM131532372

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