A Bank's Assets Tend to Be Long-Term While Its Liabilities

question 21

Multiple Choice

A bank's assets tend to be long-term while its liabilities are short-term. Therefore, when interest rates rise, the value of the bank's assets:

• A) increases by more than the value of its liabilities.
• B) will decrease by more than the value of its liabilities.
• C) increases and the value of its liabilities decreases.
• D) decreases and the value of its liabilities increases.

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Definitions:

Partnership Law

Legal regulations governing the formation, operation, and dissolution of a partnership, which is a business entity owned by two or more people.

Liability

The state of being legally responsible for something, such as a debt or obligation.

Revised Uniform Partnership Act

An updated set of laws that provide a legal framework for the formation, operation, and dissolution of partnerships in the United States.

RUPA

The Revised Uniform Partnership Act, which regulates the operation of partnerships within the United States.