If a Bank Has a Positive Gap,that Is,if It Is

question 122

Multiple Choice

If a bank has a positive gap,that is,if it is asset sensitive,the bank can hedge its interest-rate risk by which of the following activities?

• A)Reducing maturities of its assets
• B)Reducing maturities of its liabilities
• C)Using a long hedge
• D)All of the options are correct
• E)Reducing maturities of its assets and liabilities

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Definitions:

Ratio Data

A type of quantitative data that not only measures the magnitude but also allows for the comparison of differences and the calculation of ratios, having an absolute zero point.

Categorical Data

Data that can be categorized into groups or categories that are mutually exclusive, without any natural ordering.

Obtaining

The act of acquiring or getting something through effort or request.

VLOOKUP

A function in spreadsheet programs that searches for a value in the first column of a table and returns a value in the same row from a specified column.