If a Financial Organisation Has a Positive Repricing Gap,what Happens

question 6

Multiple Choice

If a financial organisation has a positive repricing gap,what happens if managers do not take action when interest rates decline?

• A) Interest-sensitive liability costs stabilise
• B) Interest-sensitive assets returns decline
• C) The rate differential on the repricing gap remains unaffected
• D) Expected pre-tax profits will not change, as the cost of interest-sensitive liabilities will decrease

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Definitions:

Differentiation

The process by which cells or tissues undergo a change toward a more specific form or function, often in the context of development.

Bone Marrow

A soft tissue inside bones where blood cells are produced, including red blood cells, white blood cells, and platelets.

Stem Cells

Undifferentiated cells capable of giving rise to indefinitely more cells of the same type, and from which certain other kinds of cells arise by differentiation.

Negative-Feedback

A process in which increases in output lead to future decreases in the same output, stabilizing systems against fluctuations.