Which of the Following Is a Measure for Banks to Use

question 8

Multiple Choice

Which of the following is a measure for banks to use to assess their exposure to interest rate risk?

• A)capital ratio
• B)leverage measure
• C)duration
• D)gap ratio
• E)duration AND gap ratio

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Definitions:

Services

Intangible products offered to consumers, involving human or mechanical efforts to fulfill needs or wants.

Payback Method

A capital budgeting technique that calculates the time required to recoup the cost of an investment, focusing on cash flows rather than profitability or cost of capital.

Bias Towards Liquidity

A preference or inclination for holding or investing in liquid assets, usually due to concerns about future cash needs or market volatility.

Project Analysis

The process of evaluating the financial and operational implications of a proposed project or investment to determine its viability and expected returns.