A Bank Expects Interest Rates to Fall with a Parallel

question 106

Multiple Choice

A bank expects interest rates to fall with a parallel downward shift in the yield curve. What action should the bank take, if it wants to benefit from this view?

• A) increase the maturity of its liabilities
• B) reduce the maturity of its asset portfolio
• C) runazerogap
• D) lengthen the maturity of its asset portfolio

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Definitions:

Revenue Centre Manager

A manager responsible for generating income and overseeing the revenue generation activities of a particular business unit, without direct control over costs or investments.

Investment Centre Manager

A role in charge of a business unit that is responsible for its own revenues, expenses, and assets, and is evaluated on its return on investment.

Cost Centre Manager

A manager responsible for a department or unit within a company that does not directly generate profit, focused on minimizing costs.

Narrow Focus

Concentration on a limited scope or a specific aspect of a problem, project, or field, which may restrict broader understanding or solutions.