What Would Be the Strategy for a Bank If It

question 532

Multiple Choice

What would be the strategy for a bank if it is unable to speculate on interest rates and/or unable to absorb market risk?

• A) to run a zero gap
• B) to hold more interest rate sensitive assets than interest rate sensitive liabilities
• C) to reduce the size of the balance sheet
• D) to hold fewer interest rate sensitive assets than interest rate sensitive liabilities

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Definitions:

Big Five

A model describing five core traits of human personality: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Frontal Lobe

A region of the brain located at the front of the cerebral cortex, involved in decision making, problem solving, control of purposeful behaviors, consciousness, and emotions.

Inhibiting Behavior

Actions or patterns that restrain or hold back certain responses.

Extraverts

Individuals who are outgoing, sociable, and energized by interactions with other people.