If a Savings Institution's Assets Have a Considerably Longer Duration

question 43

Multiple Choice

If a savings institution's assets have a considerably longer duration than its liabilities, it can reduce its exposure to interest rate risk by

• A) reducing its proportion of assets in the short duration categories.
• B) increasing its proportion of liabilities in the short duration categories.
• C) increasing its proportion of liabilities in the long duration category.
• D) A and B

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Definitions:

Patents

Legal rights granted to inventors that prevent others from making, using, or selling their invention without permission for a certain period of time.

Innovation

The introduction of new ideas, goods, services, and practices to the market, which significantly improves or enhances value.

Invention

The creation of a new product, process, or idea that did not exist before, which typically involves innovation and creativity.

Natural Monopoly

A market condition where a single supplier is most efficient in providing goods or services due to high fixed or startup costs.