If a Bank Has Assets and Liabilities in Dollars and Euros

question 1

Multiple Choice

If a bank has assets and liabilities in dollars and euros, its exposure to interest rate risk can best be minimized if the

• A)currency mix of assets is similar to that of liabilities.
• B)overall rate-sensitivity of assets and liabilities are similar.
• C)rate sensitivity of assets and liabilities is matched for each currency.
• D)A and B

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Definitions:

Dividend Growth Model

An approach to valuing a company's shares by calculating the present value of its expected dividends through discounting.

Cumulative Voting

A voting system that allows shareholders to allocate all of their votes to one candidate or distribute them among multiple candidates during an election.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with dividends that are paid out before those of common shares.

Debt

Money that is owed or due to another individual or entity, often involving agreed repayment terms and interest.