correct Answer ( C )

Interest rate risk is a significant concern for banks as changes in interest rates can affect the profitability of their assets and liabilities . Banks use various strategies to mitigate this risk , including using interest rate derivatives like swaps and futures to hedge against unfavourable rate movements , and ensuring a balance between short-term and long-term instruments . Furthermore, banks use sophisticated models to forecast future interest rate scenarios and adjust their portfolios accordingly , regularly monitoring market conditions and economic indicators to anticipate potential shifts in interest rates .