Question 1

One of the government-created giant mortgage banking firm which has subsequently been privatized is the ____________________________________.

Accepted Answer

The answer of One of the government-created giant mortgage banking...

Question 2

The change in a financial institution's __________________ is equal to difference between the average duration of assets times the change in the interest rate divided by (1+ original discount rate)times the dollar amount of total assets and the average duration of liabilities times the change in the interest rate divided by 1+ original discount rate times the dollar amount of total liabilities.

Accepted Answer

The answer of The change in a financial institution's __________________...

Question 3

In recent decades,banks have aggressively sought to insulate their assets and liability portfolios and profits from the ravages of changing interest rates.Many banks now conduct their asset-liability management strategy with the help of a(n)_____________________.

Accepted Answer

The answer of In recent decades,banks have aggressively sought to...

Question 4

When a bank has a negative duration gap,a parallel decrease in the interest rates on the assets and liabilities of the bank will lead to a(n)_________________________ in the bank's net worth.

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The answer of When a bank has a negative duration...

Question 5

_______________________ is a measure of interest-rate risk exposure which is the total difference in dollars between those assets and liabilities that can be repriced over a designated time period.

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The answer of _______________________ is a measure of interest-rate risk...

Question 6

_____________________________ are those liabilities that mature or must be repriced within the planning period.

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The answer of _____________________________ are those liabilities that mature or...

Question 7

___________________________ is the phenomenon by which interest rates attached to various assets often change by different amounts and at different speeds than interest rates attached to various liabilities.

Accepted Answer

The answer of ___________________________ is the phenomenon by which interest...

Question 8

Most lending institutions tend to do better when the yield curve is upward-sloping because they tend to have ____________ maturity gap positions.

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The answer of Most lending institutions tend to do better...

Question 9

One part of interest-rate risk is ____________________.This part of interest-rate risk reflects that as interest rates fall,any cash flows that are received are invested at a lower interest rate.

Accepted Answer

The answer of One part of interest-rate risk is ____________________.This...

Question 10

The relationship between a change in an asset's price and an asset's change in the yield or interest rate is captured by _________________________.

Accepted Answer

The answer of The relationship between a change in an...

Question 11

__________________________ is interest income from loans and investments less interest expenses on deposits and borrowed funds divided by total earning assets.

Accepted Answer

The answer of __________________________ is interest income from loans and...

Question 12

Variable rate loans and securities are included as part of _______________________ for banks.

Accepted Answer

The answer of Variable rate loans and securities are included...

Question 13

Money market deposits are included as part of ______________________ for banks.

Accepted Answer

The answer of Money market deposits are included as part...

Question 14

A bank is __________________ against changes in its net worth if its duration gap is equal to zero.

Accepted Answer

The answer of A bank is __________________ against changes in...

Question 15

One part of interest-rate risk is _____________________.This part of interest-rate risk reflects that as interest rates rise,prices of securities tend to fall.

Accepted Answer

The answer of One part of interest-rate risk is _____________________.This...

Question 16

Interest sensitive assets divided by interest sensitive liabilities is known as: ____________________________.

Accepted Answer

The answer of Interest sensitive assets divided by interest sensitive...

Question 17

The interest-rate risk which arises when a borrower has the right to pay off a loan early reducing the lender's expected rate of return is called ______________.

Accepted Answer

The answer of The interest-rate risk which arises when a...

Question 18

When a bank has a positive duration gap a parallel increase in the interest rates on the assets and liabilities of the bank will lead to a(n)__________________ in the bank's net worth.

Accepted Answer

The answer of When a bank has a positive duration...

Question 19

Interest sensitive assets less interest sensitive liabilities divided by total assets of the bank is known as _______________________.

Accepted Answer

The answer of Interest sensitive assets less interest sensitive liabilities...

Question 20

One of the principal goals of asset-liability management is to maximize or at least stabilize a bank's margin or spread.

Accepted Answer

Asset-liability management aims to manage the bank's assets and liabilities in a way that maximizes or stabilizes the margin or spread, which represents the difference between the interest earned on a bank's assets and the interest paid on its liabilities. By doing so, the bank can optimize its profitability and manage its risks effectively.

Quiz 7: Risk Management for Changing Interest Rates: Asset-Liability Management and Duration Techniques