A bank has a negative duration gap. Which one of the following statements is most correct?
A) If all interest rates are projected to increase,to limit a net value decline before rates rise,the bank should increase the amount of short-term loans on the balance sheet.
B) If all interest rates are projected to increase,to limit a net value decline before rates rise,the bank should increase the amount of short-term bonds issued by the bank.
C) If all interest rates are projected to decrease,to limit a net value decline before rates fall,the bank should increase the amount of long-term loans on the balance sheet.
D) If all interest rates are projected to decrease,to limit a net value decline before rates fall,the bank should increase the amount of long-term bonds issued by the bank.
Correct Answer:
Verified
Q2: Convexity arises because a fixed-income's price is
Q3: For a one-year maturity bucket,the repricing model
Q4: A rate sensitive asset is one that
Q5: The duration gap model is a more
Q6: If a bank has a negative repricing
Q9: A bank has a positive repricing gap
Q10: A bank is facing a forecast of
Q13: The cash flow from the interest a
Q15: If a bank wishes to have a
Q16: The repricing gap fails to consider how
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents