Which of the Following Indicates a Positive Gap According to the Repricing

question 100

Multiple Choice

Which of the following indicates a positive gap according to the repricing model?

• A)the book value of rate-sensitive liabilities is less than the book value of rate-sensitive assets.
• B)the book value of rate-sensitive assets is less than the book value of rate-sensitive liabilities.
• C)the market value of rate-sensitive assets is less than the market value of rate-sensitive liabilities.
• D)the book value of rate-sensitive liabilities is greater than the book value of rate-sensitive assets.
• E)the market value of rate sensitive assets is greater than the market value rate sensitive liabilities.

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Definitions:

Household

A single person or a group of people living together in a single living accommodation, sharing meals or living space, and may operate as a single economic unit.

Project Financing

Arrangements used to finance mainly large capital projects such as energy explorations, oil tankers, refineries, utility power plants, and so on. Usually, one or more firms (sponsors) will provide the equity capital required by the project, while the rest of the project’s capital is supplied by lenders and lessors. The most important aspect of project financing is that the lenders and lessors do not have recourse against the sponsors; they must be repaid from the project’s cash flows and the equity cushion provided by the sponsors.

Capital Investments

Funds invested in a company or organization with the expectation of achieving long-term financial gain, typically in the form of physical assets such as property, plant, or equipment.

TMX Group

A Canadian financial services company that operates multiple securities exchanges, including the Toronto Stock Exchange (TSX) and TSX Venture Exchange.