For a bank with a positive duration gap,an increase in interest rates will

Name: For a bank with a positive duration gap,an increase in interest rates will
Brand: Quizplus
Rating: 4.9 (44 reviews)

Question

Quizplus · Accepted Answer

A positive duration gap means that the bank's assets are more sensitive to interest rate changes than its liabilities. When interest rates rise, the value of the bank's assets decreases more than the value of its liabilities, potentially leading to a decrease in the bank's net worth and increasing the likelihood of insolvency.

For a Bank with a Positive Duration Gap,an Increase in Interest