The Following Information Is About Current Spot Rates for Second

question 25

Multiple Choice

The following information is about current spot rates for Second Duration Savings' assets (loans) and liabilities (CDs) . All interest rates are fixed and paid annually. If rates do not change, the balance sheet position that maximizes the FI's returns is

• A)a positive spread of 15 basis points by selling 1-year CDs to finance 2-year CDs.
• B)a positive spread of 100 basis points by selling 1-year CDs to finance 1-year loans.
• C)a positive spread of 85 basis points by financing the purchase of a 1-year loan with a 2-year CD.
• D)a positive spread of 165 basis points by selling 1-year CDs to finance 2-year loans.
• E)a positive spread of 150 basis points by selling 2-year CDs to finance 2-year loans.

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Definitions:

Future Behaviour

Predicted actions or conduct of an individual or group, based on historical data, trends, or psychological analysis.

Unplanned Questions

Questions that arise spontaneously or are not predetermined in an interview or assessment context, often to gauge authentic responses.

Predictors of Future Behaviour

Variables or indicators used to forecast an individual's future actions based on past or present data.

Behavioural Intentions

An individual's stated likelihood or planned effort to perform a specific behavior in the future.