The Following Information Is About Current Spot Rates for Second

question 100

Multiple Choice

The following information is about current spot rates for Second Duration Savings' assets (loans) and liabilities (CDs) . All interest rates are fixed and paid annually.
-If rates do not change,the balance sheet position that maximizes the FI's returns is

• A)a positive spread of 15 basis points by selling 1-year CDs to finance 2-year CDs.
• B)a positive spread of 100 basis points by selling 1-year CDs to finance 1-year loans.
• C)a positive spread of 85 basis points by financing the purchase of a 1-year loan with a 2-year CD.
• D)a positive spread of 165 basis points by selling 1-year CDs to finance 2-year loans.

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Definitions:

Observational Learning

A learning process whereby individuals acquire new behaviors or knowledge by observing and imitating others.

Higher-Order Conditioning

A procedure in which the conditioned stimulus in one conditioning experience is paired with a new neutral stimulus, creating a second (often weaker) conditioned stimulus. For example, an animal that has learned that a tone predicts food might then learn that a light predicts the tone and begin responding to the light alone. (Also called second-order conditioning.)

Mixed Emotional Reactions

Experiencing multiple emotions at the same time, which might be conflicting or complementary.

Psychotherapist

A trained professional who treats mental health issues and emotional difficulties through psychological techniques and therapies.