ACI
3I0-012 · Question #342
3I0-012 Question #342: Real Exam Question with Answer & Explanation
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Question
If you funded your fixed-income investment portfolio with short-term deposits, how would you hedge your interest rate exposure with interest rate swaps?
Options
- APay fixed and receive floating through swaps for the term of the portfolio
- BPay floating and receive fixed through swaps for the term of the portfolio
- CYou cannot: the maturity of the swaps would be longer than that of the deposits
- DYou should not: there would be too much basis risk
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