A Bank Has a Positive Repricing Gap and Estimates That

question 35

Multiple Choice

A bank has a positive repricing gap and estimates that the spread between RSAs and RSLs will move directly with interest rates. If interest rates fall,the bank's overall NII will

• A)rise.
• B)fall.
• C)be unchanged.
• D)rise or fall depending on the size of the spread effect relative to the size of the CGAP effect.

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Definitions:

Hydraulic System

A system using pressurized fluid to transfer force or motion, found in various machinery and vehicle brake systems.

Test Strips

Strips used for various types of testing, often chemical, by indicating certain conditions through color change.

Brake Fluid

A type of hydraulic fluid used in brake systems to transfer force into pressure, amplifying the braking force applied by the driver.

Piston

A cylindrical component that moves up and down in an engine's cylinder, converting combustion energy into mechanical motion.