The following shows the balance sheet for a bank. The manager wants to get an idea about the interest rate risk faced by her bank. She asks the research staff to conduct a basic gap analysis. She is a bit worried about the interest rate risk (because her job depends on how successfully she manages this risk). As a member of the research staff, which of the following actions would you recommend to be taken to reduce the Interest rate risk? Assets (Smillion) Liabilites & NW (Smillion) Rate Sensitive Assets Variable-rate loans $40 Rate Sensitive Liabilities $100 Variable-rate CDs Money market deposit accounts Short-term loans Short-term securities Fixed-Rate Assets $110 Fixed-Rate Liabilities Checkable deposits $50 Reserves Long-term loans Savings deposits Long-term securities Long-term CDs Equity capital There is more than one correct answer. Sell some of your long-term securities and use the proceeds to buy short-term securities Sell some of your short-term securities and use the proceeds to buy long-term securities Try to reduce your long-term loaris and increase your short-term laans. Try to reduce your short-tem loans and increase your long-term loans. Try to reduce your variable-rate CDs and issue more saving accounts Ty to reduce the amount of savings deposits and isue additional variable rate CDs. Reduce the amounts in money market deposit accounts and issue more long-tem CDs Reduce the amounts of long-term CDs and issue more moncy market deposit accounts.

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