Question: Consider the FI in problem (6). a. What additional risk exposure problems does the FI face? b. What are some possible solutions to the duration

Consider the FI in problem (6).

a. What additional risk exposure problems does the FI face?

b. What are some possible solutions to the duration mismatch and the illiquidity problems?

c. What advantages does securitization have in dealing with the FI’s risk exposure problems?

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