One Way That Banks Can Reduce the Duration of Their

question 42

Multiple Choice

One way that banks can reduce the duration of their asset portfolios is through the use of

• A) fixed rate mortgages.
• B) adjustable rate mortgages.
• C) certificates of deposit.
• D) short-term borrowing.
• E) none of these.

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Definitions:

Dividends

Payments made by a corporation to its shareholder members, usually derived from the company's profits.

Consolidated Statement of Cash Flows

A financial statement that shows the cash inflows and outflows of a parent company and its subsidiaries, revealing how cash is generated and used over a period.

Financing Activity

Transactions involving changes in equity and long-term liabilities on the company's balance sheet, such as issuing shares, taking out loans, or paying dividends.