If a Bank's Liabilities Are More Sensitive to Interest Rate

question 48

Multiple Choice

If a bank's liabilities are more sensitive to interest rate movements than are its assets,then

• A)an increase in interest rates will reduce bank profits.
• B)a decrease in interest rates will reduce bank profits.
• C)interest rates changes will not impact bank profits.
• D)an increase in interest rates will increase bank profits.

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Definitions:

Natural Law

a philosophy proposing that certain rights or values are inherent by virtue of human nature and can be universally understood through human reason.

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Principles and standards shared by a community that guide behavior and influence societal norms and the functioning of social institutions.

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Local laws or regulations enacted by municipal governments to govern behavior and activities within their jurisdiction.

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