One problem with basic gap analysis is that it
A) is calculated assuming interest rates on all maturities are equal.
B) is calculated assuming interest rates on all maturities change by equal amounts.
C) measures the sensitivity of net worth to interest rate changes.
D) does not measure the sensitivity of income to interest rate changes.
E) applies only to financial institutions.
Correct Answer:
Verified
Q39: Table 23.1 Q40: Duration gap analysis Q41: Credit rationing reduces adverse selection problems. Q42: What is the difference between credit risk Q43: Income gap analysis and duration gap analysis Q45: A bank manager concerned about interest income Q46: How is credit risk related to the Q47: Credit rationing occurs when lenders charge higher Q48: The difference between rate-sensitive liabilities and rate-sensitive Q49: Banks face the problem of adverse selection
First National Bank
A) is a refinement of
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