Which of the following would be the best example of a ratio used to examine a bank's interest rate risk?
A)Demand deposits/Total assets
B)Interest on time deposits/Total time deposits
C)Interest on real estate loans/Total real estate loans
D)Interest sensitive assets/Interest sensitive liabilities
E)Nonperforming assets/Total capital

Question

Quizplus · Accepted Answer

The ratio of interest sensitive assets to interest sensitive liabilities would be the best example of a ratio used to examine a bank's interest rate risk. This ratio shows the extent to which a bank's assets will experience changes in interest rates compared to its liabilities. A higher ratio indicates that a bank's assets are more sensitive to interest rate changes than its liabilities, which can lead to increased interest rate risk.

Which of the Following Would Be the Best Example of a Ratio