Does the Slope of the Interest Yield Curve Typically Have

question 40

Multiple Choice

Does the slope of the interest yield curve typically have a substantial impact on a bank's net interest margin?

• A) No, it doesn't, since the slope of the yield cure is unrelated to the spread between short-term and long-term interest rates.
• B) No, it doesn't. There isn't any link at all between the slope of the interest yield curve and a bank's net interest margin.
• C) Yes it does. In banking, long-term rates usually apply to bank deposits and money market borrowings whereas short-term interest rates are attached to loans and securities.
• D) Yes it does. Long-term rates usually apply to a bank's assets (loans, securities, etc.) and the short term interest rates are generally attached to liabilities (deposits, money market borrowings, etc.).

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