A Bank's Net Interest Margin Will Likely Decline If It

question 3

Multiple Choice

A bank's net interest margin will likely decline if it has a large amount of

• A)rate-sensitive assets and no rate-sensitive liabilities.
• B)rate-sensitive liabilities and no rate-sensitive assets.
• C)loans to technology firms.
• D)real estate loans.

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Definitions:

Successive Years

Consecutive years following one after the other without interruption.

Compound-Interest GIC

A Compound-Interest Guaranteed Investment Certificate (GIC) is a financial product that pays interest on your initial investment, with the interest being compounded at specified intervals, leading to increased returns over time.

Compounded Semiannually

The calculation of interest where it is added to the principal twice a year, resulting in the interest earning interest semiannually.

Maturity Value

The total amount payable to an investor at the end of a fixed term investment, including principal and interest.