The Performance of a Bank That Continually Concentrates in Short-Term

question 58

Multiple Choice

The performance of a bank that continually concentrates in short-term deposits in euros and adjustable-rate dollar loans with equal rate-sensitivity is

• A)unaffected if European interest rates increase and U.S. rates decrease.
• B)unaffected if U.S. interest rates increase and European interest rates decrease.
• C)adversely affected if European interest rates increase and U.S. rates decrease.
• D)adversely affected if U.S. interest rates increase and European rates decrease.
• E)A and B