If a Bank Has a Duration Gap of 2 Years,then

question 68

Multiple Choice

If a bank has a duration gap of 2 years,then a rise in interest rates from 6 percent to 9 percent will lead to

• A) a rise in the market value of its net worth of 5.66 percent.
• B) a rise in net interest income of 5.66 percent.
• C) a fall in the market value of its net worth of 5.66 percent.
• D) a fall in net interest income of 5.66 percent.
• E) an unknown change.

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Definitions:

Charitable Entity

An organization established for philanthropic rather than profit-making purposes, benefiting the public or a particular social cause.

Cash Contributions

Monetary gifts made by individuals or organizations to entities such as companies, nonprofits, or trusts, often for specific purposes or projects.

Donated Goods

Items given to an organization at no cost, often recognized in the recipient's financial records as income or an asset.

Operating Purposes

Refers to the activities and expenditures directly related to the day-to-day functions of running a business, excluding financing and investment activities.