The Key to the Interest Rate Risk Faced by Thrifts

question 66

Multiple Choice

The key to the interest rate risk faced by thrifts was

• A)their heavy investments in Treasury bills.
• B)the mismatch between the maturities of their assets and liabilities.
• C)their heavy investments in Treasury bonds.
• D)their investments in very risky projects.

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Definitions:

Economic Profit

The dissimilarity between total sales revenue and comprehensive spending, including both clear-cut and notional costs.

Price Competitively

Setting a price point for goods or services with the intention of attracting customers by being more favorable or advantageous than those of competitors.

Low Barriers To Entry

Conditions that allow for easy entry into a market by new competitors, often leading to increased competition.

Competitive Market Economy

A market structure in which companies operate in a competitive environment with little to no government oversight, and where price levels are set by the forces of supply and demand, guiding the distribution of resources via the pricing mechanism.