A Bank Has an Average Duration of Its Liabilities Equal

question 3

Multiple Choice

A bank has an average duration of its liabilities equal to 2 years. The bank's average duration of its assets is 3.5 years. The bank's market value of equity is at risk if ________.

• A) interest rates fall
• B) credit spreads fall
• C) interest rates rise
• D) the price of all fixed-income securities rises

Define and differentiate between major and minor rules within administrative rulemaking.

Explain the selection process of Administrative Law Judges (ALJs).

Understand factors considered in the administrative process for adopting new rules.

Describe the role of judicial review in relation to administrative agencies.

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Definitions:

Consolidation Purposes

The process of combining the financial statements of a parent company and its subsidiaries into one comprehensive financial statement package, to present as if the group were a single entity.

Excess Amortizations

The amount by which amortization expense exceeds the amount necessary to amortize the cost of a tangible or intangible asset over its useful life.

Intra-Entity Asset Transfers

Transactions involving the transfer of assets or services between divisions or subsidiaries within the same entity, which may need to be adjusted for in consolidated financial reporting.

Depreciation Purposes

The allocation of the cost of an asset over its useful life for accounting and tax purposes.