If a Bank Has Long-Term Fixed-Rate Assets and Short-Term Liabilities

question 22

Multiple Choice

If a bank has long-term fixed-rate assets and short-term liabilities, and interest rates increase over time, its net interest margin should

• A)decrease.
• B)increase.
• C)stay the same.
• D)EITHER decrease OR increase, depending on whether the asset maturities exceed 10 years.

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Definitions:

Neighboring State

A state that shares a border or is in close proximity to another state.

Common Law

A body of unwritten laws based on legal precedents established by the courts, influencing the governance of certain jurisdictions.

Local Courthouse

A building where judicial proceedings occur, housing courts that deal with legal disputes and administrative matters on a local or municipal level.

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Official publications that compile and report the decisions of state courts, serving as a legal precedent for future jurisprudence.