Can an FI Immunize Itself Against Interest Rate Risk Exposure

question 88

Multiple Choice

Can an FI immunize itself against interest rate risk exposure even though its maturity gap is not zero?

• A)Yes,because with a maturity gap of zero the change in the market value of assets exactly offsets the change in the market value of liabilities.
• B)No,because with a maturity gap of zero the change in the market value of assets exactly offsets the change in the market value of liabilities.
• C)Yes,because the maturity model does not consider the timing of cash flows.
• D)No,because the timing of cash flows is relevant to immunization against interest rate risk exposure.

Recognize the differences in financial statement accounts between service and merchandising businesses.

Understand the roles and definitions of various shipping terms, including FOB destination and FOB shipping point.

Recognize the types of discounts offered in business transactions and their implications.

Grasp the principles behind recording sales transactions and their impact on accounts receivable and revenue recognition.

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Definitions:

Commercial Banks

Financial institutions that provide a variety of services, including deposit accounts, loans, and other financial products, to businesses and individuals.

Financial

Relating to money or how money is managed.

Illiquid

Describes an asset or security that cannot easily be sold or exchanged for cash without a substantial loss in value.

Real Assets

Physical or tangible assets such as gold, real estate, and commodities, which have intrinsic value due to their substance and physical properties.