If a Bank Has a Duration Gap of Two Years,a

question 19

Multiple Choice

If a bank has a duration gap of two years,a rise in interest rates from 5 to 8% per annum will lead to a/an:

• A) increase of 5.71% in the market value of its net worth.
• B) fall of 5.71% in the market value of its net worth.
• C) increase of 5.71% in net interest income.
• D) fall of 5.71% in net interest income.

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Definitions:

Ethical Conduct

Refers to the guidelines or principles that govern the right behavior and decision-making processes, often based on moral standards.

Parole

The early release of a prisoner who agrees to abide by certain conditions, monitored by a parole officer, as part of the rehabilitation and reintegration into society.

Lifetime Sentences

Punishments that involve incarceration for the remainder of the convicted person's life, often imposed for the most severe crimes.

Abolished

Refers to the formal elimination or ending of a system, practice, or institution.