Assume that interest rates declined consistently over the


Hedging Effectiveness Three savings and loan institutions (S&Ls) have identical balance sheet compositions: a high concentration of short-term deposits that are used to provide long-term, fixed-rate mortgages. The S&Ls took the following positions one year ago.

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Assume that interest rates declined consistently over the last year. Which of the three S&Ls would have achieved the best performance based on this information? Explain.

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Finance Basics: Assume that interest rates declined consistently over the
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