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:

Diencephalon

The diencephalon is a region of the brain that includes structures such as the thalamus and hypothalamus, involved in sensory and autonomic functions.

Hypothalamus

A region of the brain responsible for hormone production and regulation of vital bodily functions, including temperature, hunger, and thirst.

Thalamus

In vertebrates, the portion of the diencephalon that passes on selected sensory information to the cerebrum.

Cerebrospinal Fluid

A clear, colorless body fluid found in the brain and spinal cord, playing a critical role in protecting these structures and maintaining their environment.