If Second National Bank Has More Rate-Sensitive Assets Than Rate-Sensitive

question 37

Multiple Choice

If Second National Bank has more rate-sensitive assets than rate-sensitive liabilities,it can reduce interest-rate risk with a swap that requires Second National to

• A)pay fixed rate while receiving floating rate.
• B)receive fixed rate while paying floating rate.
• C)both receive and pay fixed rate.
• D)both receive and pay floating rate.

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Definitions:

Rewards

Benefits, both tangible and intangible, given to individuals or groups as recognition for their efforts and achievements.

Timeliness

The quality of being done or occurring at a favorable or useful time; appropriateness to the time or occasion.

Performance Contingency

The concept that employee performance outcomes are contingent upon certain conditions or factors.

Equity

The concept of fairness or justice in the way people are treated within various contexts, or in finance, the ownership interest in a company as represented by stocks or shares.