A bank has a positive repricing gap and estimates that the spread between RSAs and RSLs will move directly with interest rates. If interest rates fall,the bank's overall NII will

Question

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A positive repricing gap means that the bank's interest-sensitive assets (RSAs) reprice more quickly than its interest-sensitive liabilities (RSLs). If interest rates fall, the interest earned on RSAs will decrease faster than the interest paid on RSLs, leading to a decrease in NII. Therefore, the bank's overall NII will fall.

A Bank Has a Positive Repricing Gap and Estimates That