CGAP effect is the relationship between changes in interest rates and changes in net interest income.

Question

Quizplus · Accepted Answer

CGAP effect stands for "Cumulative Gap Effect on Net Interest Income" and it quantifies the impact of changes in interest rates on an institution's net interest income by analyzing the volume and interest rate sensitivity of its earning assets and interest-bearing liabilities over time. Therefore, the statement is true.

CGAP Effect Is the Relationship Between Changes in Interest Rates