If a bank has a positive interest-sensitive gap,one of the possible management responses would be to:
A)wait for the interest rates to rise or be stable.
B)shorten asset maturities.
C)decrease interest-sensitive liabilities.
D)increase interest-sensitive assets.
E)extend liability maturities.

Question

Quizplus · Accepted Answer

A positive interest-sensitive gap means that the bank's assets are more sensitive to interest rate changes than its liabilities. This means that if interest rates rise, the bank's assets will increase in value more than its liabilities, resulting in a net gain. Therefore, the bank can wait for interest rates to rise or be stable to benefit from this positive gap.

If a Bank Has a Positive Interest-Sensitive Gap,one of the Possible