Which of the Following Statements Is True

question 63

Multiple Choice

Which of the following statements is true?

• A)An FI that has a positive on-balance-sheet gap and a negative off-balance-sheet gap is not sure about interest movements.
• B)An FI that has a positive on-balance-sheet gap and a negative off-balance-sheet gap has made a mistake in hedging its interest rate risk.
• C)An FI that has a positive on-balance-sheet gap and a negative off-balance-sheet gap is using its off-balance-sheet position to hedge its on-balance-sheet position.
• D)None of the listed options are correct.

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Definitions:

Liquidation Expenses

Costs associated with winding up a company's operations, selling off assets, and paying off creditors in the event of liquidation or bankruptcy.

Profits and Losses

The financial results of a company's operations, indicating the net money made or lost within a specific period.

Liquidation Expenses

Costs associated with winding down a company's operations, including paying off debts and distributing remaining assets to shareholders.

Capital Account Balances

The value held within capital accounts, reflecting the total equity contributions and adjustments from income, losses, and withdrawals by owners.