Banks with a positive cumulative interest-sensitive gap will benefit if interest rates rise,but lose income if interest rates decline.

Question

Quizplus · Accepted Answer

A positive cumulative interest-sensitive gap means that banks have more interest-earning assets than interest-bearing liabilities. If interest rates rise, the interest earned on these assets will increase, leading to higher profits for the bank. However, if interest rates decline, the interest earned on these assets will decrease, leading to lower profits for the bank.

Banks with a Positive Cumulative Interest-Sensitive Gap Will Benefit If