You work for a bank and a customer comes in with the following problem. The customer has lent $1 million for 10 years with a fixed interest rate. The customer financed the loan by borrowing with 1-year commercial paper. 

What interest rate risk is the customer exposed to and what product would you recommend to hedge this risk? How would this product protect the customer?

Answer rating: 100% (QA)

The customer is exposed to interest rate risk because the interest rate on the commercial pa... View the full answer