A bank's balance sheet is characterized by long-term fixed-rate assets funded by short-term variable-rate liabilities. Most likely the bank has a

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Quizplus · Accepted Answer

The bank has long-term fixed-rate assets and short-term variable-rate liabilities, which means that liabilities will reprice more frequently than assets. This results in a negative repricing gap. Additionally, long-term assets have a longer duration than short-term liabilities, leading to a positive duration gap.

A Bank's Balance Sheet Is Characterized by Long-Term Fixed-Rate Assets