An FI's Balance Sheet Is Characterized by Long-Term Fixed-Rate Assets

question 48

Multiple Choice

An FI's balance sheet is characterized by long-term fixed-rate assets funded by short-term variable-rate securities. Most likely the bank has a

• A)positive repricing gap and a positive duration gap.
• B)positive repricing gap and a negative duration gap.
• C)negative repricing gap and a positive duration gap.
• D)negative repricing gap and a negative duration gap.

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Definitions:

LIFO

An inventory valuation method where the last items added to inventory are considered the first ones sold during a period of time; stands for Last-In, First-Out.

FIFO

An accounting method for inventory valuation where the first items acquired are the first ones sold, standing for First In, First Out.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specific period, indicating the efficiency in managing stock levels.

Days' Sales

A metric that estimates the average length of time it takes for a company to convert its accounts receivable into cash.