A Thrift Institution Can Reduce Interest Rate Risk by

question 8

Multiple Choice

A thrift institution can reduce interest rate risk by

• A) making more mortgages financed by six month CD's.
• B) performing more mortgage banking activities.
• C) buying Treasury bond futures to reduce the thrift's negative maturity GAP.
• D) making more thirty-year mortgages.

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Definitions:

ATC

Average Total Cost, which is the total cost of production divided by the number of goods produced.

Output

The total amount of goods or services produced by a company, industry, or economy within a specific period.

Marginal Study Time

The additional benefit or improvement in performance obtained from studying for one more unit of time.

Marginal Returns

The additional output or benefit received from producing one more unit of a good or service.