If Friendly Finance Company Has More Rate-Sensitive Assets Than Rate-Sensitive

question 19

True/False

If Friendly Finance Company has more rate-sensitive assets than rate-sensitive liabilities,it may reduce risk with a swap.

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Definitions:

Amortization

The gradual reduction of a debt over a period of time through regular payments or the systematic allocation of intangible asset costs over its useful life.

Unrealized Gain

A profit that results from holding onto an asset rather than selling it, not reflected in cash flow or income until the asset is sold.

Positive Gross Profit

A financial state where a company's revenue from sales exceeds its cost of goods sold.

Transfer of Assets

The act of transferring ownership of assets from one party to another, which can include both tangible and intangible assets.