When is interest rate risk for a bank greatest?
A) When interest rates are volatile.
B) When interest rates are stable.
C) When inflation is high.
D) When inflation is low.
E) When loan defaults are high.

Question

Quizplus · Accepted Answer

Interest rate risk for a bank is greatest when interest rates are volatile, as it becomes difficult for the bank to manage assets and liabilities effectively. A sudden increase or decrease in interest rates can lead to significant losses for the bank.

When Is Interest Rate Risk for a Bank Greatest