Which of the Following Statements Is True

question 41

Multiple Choice

Which of the following statements is true?

• A)The optimal duration gap is zero.
• B)Duration gap measures the impact of changes in interest rates on the market value of equity.
• C)The shorter the maturity of the FI's securities, the greater the FI's interest rate risk exposure.
• D)The duration of all floating rate debt instruments is equal to the time to maturity.
• E)The duration of equity is equal to the duration of assets minus the duration of liabilities.

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Definitions:

Deposits In Transit

Funds that have been sent to a bank but not yet recorded by the bank in the company’s account balance.

Outstanding Checks

Checks that have been written and recorded in a company's accounting system but have not yet been cashed or cleared by the bank.

Credit Memo

A document issued by a seller to a buyer, reducing the amount that the buyer owes to the seller under previous invoices.

Sarbanes Oxley

A U.S. law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures, influenced by financial scandals.