If an Organisation Has a Repricing Gap Equal to a Positive

question 13

Multiple Choice

If an organisation has a repricing gap equal to a positive $20 million,a 500 basis point increase in interest rates will cause profits to:

• A) rise by $1.0 million.
• B) rise by $10 million.
• C) fall by $1.0 million.
• D) fall by $10 million.

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Definitions:

Investing Activities

Refers to the portion of a company's cash flow statement that reflects the amount of money spent on or generated from investments in long-term assets, such as property, plant, equipment, or securities.

Free Cash Flow

A measure of financial performance calculated as operating cash flow minus capital expenditures, reflecting the amount of cash a company can generate after maintaining or expanding its asset base.

Operating Cash Flow

Cash generated from a company's normal business operations.

Financial Ratios

Quantitative measures derived from financial statements used to assess a company's performance, financial health, and valuation.