Measuring the Sensitivity of Bank Profits to Changes in Interest

question 37

True/False

Measuring the sensitivity of bank profits to changes in interest rates by multiplying the gap for several maturity subintervals by the change in the interest rate is called duration analysis.

Understand the implications of corrective taxes and subsidies on economic efficiency and government revenue.

Understand the role and impact of patent protection in managing technology spillovers.

Comprehend the concept of externalities and their effect on market equilibrium, including positive externalities.

Grasp the inefficiency of prohibiting all polluting activities and the concept of the optimal level of pollution.

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Definitions:

Cash Dividends

Profits given to stockholders by a corporation, typically as a way to distribute earnings.

New Shares

Additional stock issued by a company, potentially diluting the ownership percentage of existing shareholders.

Dividend Income

Earnings obtained by holding company shares, typically dispensed from the firm's earnings.

Optimal Dividend Policy

The best strategy a company can adopt for the payment of dividends, balancing between retaining earnings for growth and satisfying shareholders.