If a Bank Has More Interest-Rate Sensitive Liabilities Than Interest-Rate

question 108

Multiple Choice

If a bank has more interest-rate sensitive liabilities than interest-rate sensitive assets, an increase in the interest rate will cause profits to:

• A) increase.
• B) decrease.
• C) remain constant.
• D) be negative, meaning there will not be profits, only losses.

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Definitions:

Product Development

The process of creating or improving a product or service, from initial idea through research, design, testing, and finally to launch.

Payoff Matrix

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Repeated Game

A strategic interaction (game) between two or more parties (players) that all parties know will take place repeatedly.

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