If a Bank Has More Rate-Sensitive Assets Than Rate-Sensitive Liabilities

question 43

Multiple Choice

If a bank has more rate-sensitive assets than rate-sensitive liabilities

• A)it reduces interest rate risk by swapping rate-sensitive income for fixed rate income.
• B)it reduces interest rate risk by swapping fixed rate income for rate-sensitive income.
• C)it increases interest rate risk by swapping rate-sensitive income for fixed rate income.
• D)it neutralizes interest rate risk by receiving and paying fixed-rate streams.

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Definitions:

Hypercapnia

Higher than normal levels of carbon dioxide in the blood or tissues.

Acidic

A term describing a substance with a pH less than 7, which is characteristic of having a higher concentration of hydrogen ions.

Hyperventilating

Excessive and fast breathing that can lead to a decrease in carbon dioxide levels in the blood, often triggered by stress or panic.

Apnea

Apnea is a temporary cessation of breathing, especially during sleep, which can be a sign of a sleep disorder such as sleep apnea.