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How Do You Interpret the Position of an FI with a Positive

Question 33

Multiple Choice

How do you interpret the position of an FI with a positive on-balance-sheet gap and a negative off-balance sheet gap?


A) The FI uses its on-balance-sheet activities to hedge its off-balance-sheet activities.
B) The FI uses its off-balance-sheet activities to hedge its on-balance-sheet activities.
C) The FI believes that interest rates will increase and made a mistake in setting its gap for off-balance-sheet activities.
D) The FI believes that interest rates will increase and made a mistake in setting its gap for on-balance-sheet activities.

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