GNMA Pass-Throughs Can Assist an FI in Resolving Duration Mismatch

question 25

True/False

GNMA pass-throughs can assist an FI in resolving duration mismatch and illiquidity risk problems.

---

Definitions:

Financial Statement

A formal record of the financial activities and position of a business, individual, or other entity, typically including a balance sheet, income statement, and cash flow statement.

BAT Model

A theoretical framework for analyzing the behavior, attitudes, and techniques necessary for effective leadership or managerial performance.

Optimal Cash Position

The Optimal Cash Position is the ideal amount of cash that a company aims to hold for covering immediate transactional needs while minimizing holding costs, ensuring liquidity without forgoing potential higher returns from other investments.

Cash Surpluses

Excess funds that a business possesses after it has paid all expenses and liabilities, which can be used for investment, paying down debt, or other purposes.