When a Bank Has a Negative Duration Gap,a Parallel Decrease

question 138

Short Answer

When a bank has a negative duration gap,a parallel decrease in the interest rates on the assets and liabilities of the bank will lead to a(n)_________________________ in the bank's net worth.

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Definitions:

Total Utility

The cumulative satisfaction or value a consumer receives from consuming a particular quantity of goods or services.

Money Income

The total income a person or entity receives in monetary form, including wages, salaries, benefits, and income from investments.

Marginal Rate

A term used to describe the rate at which one variable changes as another variable changes by a single unit, often applied in economic analysis like the marginal tax rate or marginal rate of substitution.

Substitution

The act of replacing one good or service with another due to changes in price or preference.