Paul Smith is planning to invest in the stock of Capital City Bank.He is examining the ratios of interest sensitive assets to interest sensitive liabilities and uninsured deposits to total deposits.What type of risk is Paul attempting to measure with these ratios?
A)Credit risk
B)Liquidity risk
C)Legal risk
D)Interest rate risk
E)Operational risk

Question

Quizplus · Accepted Answer

Paul is attempting to measure interest rate risk with the ratios of interest sensitive assets to interest sensitive liabilities and uninsured deposits to total deposits. These ratios are used to determine the bank's exposure to changes in interest rates, which can have a significant impact on its profitability and overall financial health.

Paul Smith Is Planning to Invest in the Stock of Capital