A Bank with a Negative Repricing Gap Could Enter into a Swap

question 32

True/False

A bank with a negative repricing gap could enter into a swap to pay a fixed rate of interest and receive a variable rate of interest to effectively reduce its repricing gap.

---

Definitions:

Common Share

A type of equity ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.

Par Value

The nominal value of a bond or stock as declared by the issuer, not always representing its current market price.

Journal Entries

Recorded transactions in the accounting books that track all financial activities of a business.

Common Stock

A type of security that represents ownership in a corporation, with holders usually having voting rights and a claim on profits in the form of dividends.