During a Period of Rising Interest Rates, a Bank's Net

question 54

Multiple Choice

During a period of rising interest rates, a bank's net interest margin will likely decline if it has a large amount of

• A)rate-sensitive assets and no rate-sensitive liabilities.
• B)rate-sensitive liabilities and no rate-sensitive assets.
• C)loans to technology firms.
• D)real estate loans.

---

Definitions:

Simple Interest

Interest calculated only on the principal amount, or on that portion of the principal amount that remains unpaid.

Months

Units of time used in accounting and financial contexts to represent periods or durations, often for reporting, planning, or measurement purposes.

Promissory Note

A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

Maturity Date

The date on which a financial obligation must be repaid in full.