The Fact That a Bank's Assets Tend to Be Long-Term

question 109

Multiple Choice

The fact that a bank's assets tend to be long-term while its liabilities are short-term creates:

• A) interest-rate risk.
• B) credit risk.
• C) lower risk for the bank, this is why they follow this strategy.
• D) trading risk.

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Definitions:

Formalization

The process of creating or implementing formal rules, procedures, and structures within an organization to standardize operations and behaviors.

Standardization

The process of implementing and developing technical standards to ensure consistent, quality processes and products.

Coordinating Mechanism

Procedures or systems used to align and manage activities and tasks across different parts of an organization or team.

Organic Structure

An organizational structure characterized by flexibility, decentralization of authority, and a broad scope of operation, allowing for quick adaptation to changes.