If we are at the bottom of a business cycle and interest rates are low and expected to rise,bank management would want _________ for the horizon where the interest rates are expected to rise.

Question

Quizplus · Accepted Answer

A large positive gap means that the bank has more rate-sensitive assets than liabilities, which would benefit the bank when interest rates rise, as the income from assets would increase more than the cost of liabilities.

If We Are at the Bottom of a Business Cycle