If a Bank Has a ____ Duration Gap, Its Average

question 23

Multiple Choice

If a bank has a ____ duration gap, its average asset duration is probably ____ than its liability duration.

• A)zero; smaller
• B)positive; larger
• C)negative; larger
• D)None of these are correct.

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Definitions:

Marginal Revenue

The increment in revenue realized from the sale of an additional unit of a product.

Market Price

The current price at which a good or service can be bought or sold in an open and competitive market.

Purely Competitive Market

A market structure characterized by a large number of buyers and sellers, homogeneous products, and free entry and exit, leading to price taking behavior.

Purely Competitive Firm

A company operating in a market where there are many buyers and sellers offering homogeneous products, leading to the inability to influence market price.