Which of the following relationships does NOT hold in the pricing of fixed-rate assets given changes in market rate?
A) A decrease in interest rates generally leads to an increase in the value of assets.
B) Longer maturity assets have greater changes in price than shorter maturity assets for given changes in interest rates.
C) The absolute change in price per unit of maturity time for given changes in interest rates decreases over time, although the relative changes actually increase.
D) For a given percentage decrease in interest rates, assets will increase in price more than they will decrease in price for the same, but opposite increase in rates.
E) None of these.
Correct Answer:
Verified
Q48: An FI finances a $250,000 2-year fixed-rate
Q58: A positive gap implies that an increase
Q60: The repricing model is based on an
Q61: Which of the following describes the condition
Q62: The balance sheet of XYZ Bank appears
Q64: The balance sheet of XYZ Bank appears
Q65: The average maturity of the liabilities of
Q66: The following are the assets and liabilities
Q74: A bank that finances long-term fixed-rate mortgages
Q80: Which of the following statements is true?
A)An
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents