Banks Experience Interest Rate Risk

question 42

Multiple Choice

Banks experience interest rate risk

• A)if adverse selection problems are particularly severe.
• B)if moral hazard problems are particularly severe.
• C)on any investment that has high information costs.
• D)if changes in interest rates cause bank profits to fluctuate.

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Definitions:

Payee

The individual or entity to whom a payment is to be made.

Leap Year

A year consisting of 366 days, with an extra day added to February, occurring every four years to help synchronize the calendar year with the solar year.

Accounts Payable

A liability account tracking amounts owed by a company to suppliers or creditors for goods and services received.