The change in a bank's net income that occurs due to changes in interest rates equals the overall change in market interest rates (in percentage points)times ____________.
A)volume of interest-sensitive assets
B)price risk of the bank's assets
C)price risk of the bank's liabilities
D)size of the bank's cumulative gap
E)None of the options is correct

Question

Quizplus · Accepted Answer

The change in a bank's net income due to changes in interest rates is calculated by multiplying the overall change in market interest rates (in percentage points) by the size of the bank's cumulative gap. The cumulative gap measures the difference between the volumes of interest-sensitive assets and interest-sensitive liabilities over a certain period.

The Change in a Bank's Net Income That Occurs Due