Given that most banks have positive gap and negative durations,banks prefer

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Quizplus · Accepted Answer

Banks with positive gap and negative durations benefit from lower market interest rates because their assets (loans) typically reprice or mature slower than their liabilities (deposits). Lower interest rates can reduce the cost of paying interest on deposits more quickly than they reduce the interest income from loans, thus potentially increasing the bank's net interest margin and profitability.

Given That Most Banks Have Positive Gap and Negative Durations,banks