A Bank Has a Positive Repricing Gap Using a Six-Month

question 19

Multiple Choice

A bank has a positive repricing gap using a six-month maturity bucket. Which one of the following statements is most correct?

• A)If all interest rates are projected to increase,to limit a profit decline when this occurs,the bank could encourage its retail loan customers to switch from one-year adjustable rate loans to fed funds loans.
• B)If all interest rates are projected to decrease,to limit a profit decline when this occurs,the bank could encourage its retail loan customers to switch from one-month reset floating rate loans to three-year fixed-rate loans at current rates.
• C)If all interest rates are projected to decrease,to limit a profit decline when this occurs,the bank could encourage its retail loan customers to switch from fixed-rate mortgages to adjustable rate mortgages.
• D)If all interest rates are projected to increase,to limit a profit decline when this occurs,the bank could encourage its retail loan customers to switch from three-year to five-year auto loans.
• E)If all interest rates are projected to decrease,to limit a profit decline when this occurs,the bank could encourage its retail loan customers to switch from their bank to another bank.

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Definitions:

Unqualified Indorser

A term likely meant to refer to an unqualified endorsement, where an endorser does not limit their liability on a negotiable instrument.

Liability

The state of being legally responsible for something, especially in terms of debts or legal obligations.

Forging

The illegal act of creating, altering, or imitating objects, documents, or signatures with the intent to deceive.

Collect

The action of gathering items or amounts due, often in the context of debts, payments, or data.