If a Corporation Has an Asset Sensitive Gap in a Rising

question 128

Multiple Choice

If a corporation has an asset sensitive gap in a rising rate environment, which of the following would be considered an appropriate hedging strategy to prevent a decrease in net interest income?

• A) Take no action
• B) Purchase an interest rate floor
• C) Enter into an interest rate swap to receive fixed and pay floating rate payments
• D) Enter into an interest rate swap to receive floating and pay fixed rate payment

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Definitions:

Cognitive Dissonance

the psychological discomfort experienced by an individual who holds two or more contradictory beliefs, ideas, or values at the same time.

Alternative Evaluation

The process by which consumers compare different products or brands to make purchasing decisions.

Problem Recognition

The initial stage in the consumer decision-making process, where the consumer identifies a need or problem that requires resolution.

Information Search

The process by which consumers seek out and review information about products, services, or brands to make informed purchasing decisions.