If Finance Companies with a Greater Rate-Sensitivity of Liabilities Than

question 5

Multiple Choice

If finance companies with a greater rate-sensitivity of liabilities than assets wanted to reduce interest-rate risk, they could

• A)shorten their average asset life.
• B)lengthen their average asset life.
• C)shorten the maturity of debt that they issue.
• D)make greater use of fixed-rate loans.

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Definitions:

Letters

Characters that are used in an alphabet to represent sounds and form words.

Word Superiority Effect

A phenomenon in cognitive psychology that people have better recognition of letters presented within words as opposed to isolated letters or letters within non-words.

Familiar Word

A word that is well-known or easily recognized by an individual, contributing to easier understanding and processing of language.

Letter

In this context, "Letter" is not specifically defined as a psychological or physiological term; thus, it might be referring to a form of written communication.