Banks with a Negative Cumulative Interest-Sensitive Gap Will Benefit If

question 87

True/False

Banks with a negative cumulative interest-sensitive gap will benefit if interest rates rise,but lose income if interest rates decline.

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Definitions:

Risk-Free Return

The theoretical return on investment with no risk of financial loss, typically associated with government bonds.

Standard Deviations

A statistical measure that quantifies the dispersion or spread of a set of data points relative to its mean, often used in the context of investment returns to measure volatility.

Geometric Average Return

An average rate of return on an investment that compounds over time, calculated by taking the nth root of the total products of returns.

Dividend Corporation

A company known for regularly distributing a portion of its earnings to shareholders in the form of dividends.