If the Interest Rate Spread Between Rate Sensitive-Assets and Rate

question 69

True/False

If the interest rate spread between rate sensitive-assets and rate sensitive liabilities increases for a bank, future increases in interest rates will lead to an increase in net interest income.

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Definitions:

Fair Market Value

The price at which an asset would be bought or sold in an open market.

Tax Consequences

The financial effects of transactions on tax liabilities, including how investments, income, or deductions affect taxes owed.

Basis

The initial value of an asset for tax purposes, usually the purchase price, used to calculate gains or losses when the asset is sold.

Recognized Gain

The profit realized from the sale or exchange of an asset over its adjusted basis.