If a Bank Expected Interest Rates to Consistently ____ Over

question 20

Multiple Choice

If a bank expected interest rates to consistently ____ over time, it will consider allocating most funds to rate-____ assets.

• A)decrease; sensitive
• B)decrease; insensitive
• C)increase; insensitive
• D)none of the above

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Definitions:

Interest Rate

The percentage at which interest is charged or paid on amounts of money, reflecting the price of credit or returns on investment.

Personal Property

Movable property that is not attached to real estate, including vehicles, furniture, and personal belongings.

U.S. Government Bonds

Debt securities issued by the United States Department of the Treasury to fund federal government operations and obligations, considered low-risk investments.

Savings Account

A deposit account held at a financial institution that provides principal security and a modest interest rate.