If a Bank's Liabilities Are More Sensitive to Interest Rate

question 48

Multiple Choice

If a bank's liabilities are more sensitive to interest rate movements than are its assets,then

• A)an increase in interest rates will reduce bank profits.
• B)a decrease in interest rates will reduce bank profits.
• C)interest rates changes will not impact bank profits.
• D)an increase in interest rates will increase bank profits.

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Definitions:

Access Method

A method or protocol by which data is accessed and stored in a storage device or transferred over a network.

PLC

Programmable Logic Controller, a digital computer used for automation of electromechanical processes.

Full-duplex Transmission

A mode of communication that allows data to be transmitted simultaneously in both directions on a signal carrier, enabling two-way communication at the same time.