Which of the Following Statements Is True

question 41

Multiple Choice

Which of the following statements is true?

• A)The optimal duration gap is zero.
• B)Duration gap measures the impact of changes in interest rates on the market value of equity.
• C)The shorter the maturity of the FI's securities, the greater the FI's interest rate risk exposure.
• D)The duration of all floating rate debt instruments is equal to the time to maturity.
• E)The duration of equity is equal to the duration of assets minus the duration of liabilities.

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Definitions:

Impeller

The driving member of a torque converter torus; the impeller is mechanically connected to the engine crankshaft and should rotate at the same speed.

Lock-up Clutch

A mechanism used in automatic transmissions that locks the engine directly to the transmission's output, improving fuel efficiency and performance.

Overrunning Clutch

A drive-protection mechanism that prevents a drive member from being driven; for instance, after a starter motor has started the engine, the overrunning clutch prevents the engine from driving the starter and damaging it.

Flex Plate

A metal disc that connects the engine to the torque converter in automatic transmissions, allowing power transfer.