What Is Interest Rate Immunization in the Context of Bank

question 286

Multiple Choice

What is interest rate immunization in the context of bank gap management?

• A) the strategy of holding more interest rate sensitive assets than interest rate sensitive liabilities
• B) the strategy of holding fewer interest rate sensitive assets than interest rate sensitive liabilities
• C) reducing the size of the balance sheet
• D) structuring a bank's portfolio so that its net interest revenue and/or the market value of its portfolio will not be adversely affected by changes in interest rates

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Definitions:

Common-Size Financial Statement

A financial analysis tool that expresses each line item as a percentage of a common base figure.

Vertical Analysis

A financial analysis method that compares different items on a financial statement to a single base figure, providing insights into the composition of those figures.

Horizontal Analysis

A financial analysis technique that compares historical financial data across several periods to identify trends and growth patterns.

Days' Sales in Inventory

A financial metric calculating the average number of days a company holds inventory before selling it, reflecting inventory management efficiency.