Which One of the Following Statements About Interest Rate Movements

question 578

Multiple Choice

Which one of the following statements about interest rate movements is true?

• A) An upward parallel shift of interest rates will cause a loss of income if the rate-sensitivity of a bank's liabilities is higher than the rate-sensitivity of its assets.
• B) A bank will lose income if it has more rate-sensitive liabilities than rate-sensitive assets.
• C) Falling interest rates will always result in mark-to-market profits on short positions in fixed rate securities.
• D) Rising interest rates can result in mark-to-market losses on fixed-rate assets.

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