Which of the following is false?
A) The higher the absolute value of the gap, the greater the degree of interest rate risk.
B) Most banks have a positive gap. Thus, increased interest rates cause bank income to rise.
C) One can predict the magnitude of change in bank income due to interest rate changes by multiplying the gap by the percentage point change in the interest rate.
D) If a bank's asset- liability committee believes interest rates will rise in the future, it should move the bank's balance sheet toward a positive gap.

Question

Quizplus · Accepted Answer

The Answer of Which of the following is false?
A) The higher the absolute value of the gap, the greater the degree of interest rate risk.
B) Most banks have a positive gap. Thus, increased interest rates cause bank income to rise.
C) One can predict the magnitude of change in bank income due to interest rate changes by multiplying the gap by the percentage point change in the interest rate.
D) If a bank's asset- liability committee believes interest rates will rise in the future, it should move the bank's balance sheet toward a positive gap.

Which of the Following Is False