If a US Bank Has Variable-Rate Assets in US Dollars

question 106

Multiple Choice

If a US bank has variable-rate assets in US dollars and fixed-rate liabilities in Euros, the bank is exposed to

• A)interest rate increases and an appreciation of the dollar.
• B)interest rate declines and an appreciation of the dollar.
• C)interest rate increases and a depreciation of the dollar.
• D)interest rate declines and a depreciation of the dollar.
• E)zero exposure to interest rate and exchange rate exposures.

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Definitions:

Reasonable Person Standard

A legal standard used to determine how an average person with ordinary prudence would act in certain circumstances.

Plaintiff

The party that initiates a lawsuit by filing a complaint against the defendant for legal redress.

Negligence

A failure to exercise the level of care that someone of ordinary prudence would have exercised in similar circumstances, leading to harm or damage.

Action

In legal terms, an action refers to a formal process by which one party sues another, seeking judicial intervention to resolve a dispute.