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How does a policy of matching the maturities of assets

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Reference no: EM133006197

Problem 1: How does a policy of matching the maturities of assets and liabilities work (a) to minimize interest rate risk and (b) against the asset-transformation function for FIs?

Problem 2: Corporate bonds usually pay interest semiannually. If an FI decided to change from semiannual to annual interest payments, how would this affect the bond's interest rate risk?

Reference no: EM133006197

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