An FI with a Negative Gap of $20 Million Suffers

question 40

True/False

An FI with a negative gap of $20 million suffers a $0.2 million decrease in its net interest income if interest rates decrease by 1 per cent.

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Definitions:

Rejection

The act of dismissing or refusing acceptance, acknowledgment, or approval, which can occur in interpersonal relationships, workplace settings, or social interactions.

Contrast Effect

A cognitive bias where the value or quality of an object is perceived differently when compared alongside other objects, significantly altering perception and judgement.

Balance Theory

A psychological theory suggesting that individuals strive for consistency and balance in their relationships and beliefs for psychological comfort.

Unit Relation

The way in which different components or elements are connected and interact within a system or structure.