You and a friend are discussing the savings and loan crisis. She states that the whole mess
Question:
You and a friend are discussing the savings and loan crisis. She states that "the whole mess started in the early 1980 s. When short-term rates skyrocketed, S\&Ls got killed--their spread income went from positive to negative. They were borrowing short and lending long."
a. What does she mean by "bor rowing short and lending long"?
b. Are higher or lower interest rates beneficial to an institution that borrows short and lends long?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Foundations Of Financial Markets And Institutions
ISBN: 9780136135319
4th Edition
Authors: Frank J Fabozzi, Franco G Modigliani, Frank J Jones
Question Posted: