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Question(s) / Instruction(s):

A commercial bank recognizes that its net income suffers whenever interest rates increase. Which of the following strategies would protect the bank against rising interest rates?
A    Buying inverse floaters
B    Entering into an interest rate swaps where the bank receives a fixed payment stream, and in return agrees to make payments that float with market interest rates
C    Purchase principal only (PO) strips that decline in value whenever interest rates rise
D    Enter into a short hedge where the bank agrees to sell interest rate futures
E    Sell some of the bank’s floating-rate loans and use the proceeds to make fixed-rate loans

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