Which of the Following Statements Is True Regarding Effects of Interest

question 72

Multiple Choice

Which of the following statements is true regarding effects of interest rate changes on the market value of an FI's equity or net worth?

• A)the leverage adjusted duration gap reflects the degree of duration mismatch in an FI's balance sheet.
• B)the size of the FI reflects the scale of the FI and its potential net worth exposure from any given interest rate shock.
• C)the size of the interest rate shock; the larger the size the greater the FI's exposure.
• D)A, B, and C are true.
• E)none of the above are true.

---

Definitions:

Overapplied Overhead

A situation where the allocated manufacturing overhead cost exceeds the actual manufacturing overhead cost incurred.

Underapplied Overhead

Occurs when the allocated factory overhead costs are less than the actual overhead costs incurred.

Overhead Applied

The process of allocating estimated overhead costs to specific jobs or activities based on a predetermined rate.

Customized Wedding Gowns

Bespoke bridal dresses that are tailored or specifically designed to meet the personal preferences and measurements of the bride.