I would like to seek clarification on the answer for Question 3 of the Practice Test for Chapter 1.
Question 3 asks :- By which of the following means may a Bank mitigate interest rate risk?
Page 11 of the Study Text under the heading 4.2.1. (Interest rate risk) under the first line of the last paragraph states that "In order to mitigate this risk, the bank should lend at base lending plus a spread".
The given answer indicates C. By lending to customer with high debt-servicing ratio.
Which I think is incorrect.
Appreciate your clarification.