A Financial Institution with a Negative Gap Can Reduce the Risk

question 117

Multiple Choice

A financial institution with a negative gap can reduce the risk of loss due to changing interest rates by:

• A)extending asset maturities.
• B)increasing short-term interest-sensitive liabilities.
• C)using financial futures or options contracts.
• D)All of the options are correct
• E)None of the options are correct

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Definitions:

Maximum Efficiency

The highest level of productivity and effectiveness that can be achieved with the least amount of waste, effort, or expense.

Economic Benefits

Financial advantages or gains obtained from a particular activity, investment, or decision.

Job Specialization

The process of focusing one's occupational concentration on a specific area of expertise, making the individual more adept at a particular task.

Motivator-Hygiene Theory

The Motivator-Hygiene Theory, proposed by Frederick Herzberg, suggests that job satisfaction and dissatisfaction arise from two different sets of factors: motivators, which can create job satisfaction, and hygiene factors, which can prevent dissatisfaction but not necessarily create satisfaction.