Question: The most typical interest-rate hedging problem financial institutions face is: Avoiding a fall in borrowing costs. Avoiding interest-sensitive assets equaling interest-sensitive liabilities. Avoiding decrease in

The most typical interest-rate hedging problem financial institutions face is:

  1. Avoiding a fall in borrowing costs.
  2. Avoiding interest-sensitive assets equaling interest-sensitive liabilities.
  3. Avoiding decrease in net interest income resulting from movements in market interest rates.
  4. Avoiding a fall in interest returns expected from loans and security holdings.

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