A commercial bank recognizes
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?
|[removed]||Buying inverse floaters.|
|[removed]||Entering into an interest rate swap where the bank receives a fixed payment stream, and in return agrees to make payments that float with market interest rates.|
|[removed]||Purchase principal only (PO) strips that decline in value whenever interest rates rise.|
|[removed]||Enter into a short hedge where the bank agrees to sell interest rate futures.|
|[removed]||Sell some of the bank’s floating-rate loans and use the proceeds to make fixed-rate loans.|
Suppose hockey skates sell in Canada for 165 Canadian dollars, and 1 Canadian dollar equals 0.71 U.S. dollars. If purchasing power parity (PPP) holds, what is the price of hockey skates in the United States?
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