Which of the Following Statements Is True

question 8

Multiple Choice

Which of the following statements is true?

• A)An FI with a negative repricing gap expects interest rates to remain stable.
• B)An FI with a negative repricing gap expects interest rates to rise.
• C)An FI with a negative repricing gap expects interest rates to remain fall.
• D)An FI with a negative repricing gap has not particular expectations regarding interest rate movements.

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Definitions:

Protective Covenant

Part of the indenture limiting certain transactions that can be taken during the term of the loan, usually to protect the lender’s interest.

Preemptive Right Provision

A clause in a contract that gives existing shareholders the right to buy new shares before the company offers them to the public, in order to maintain their fractional ownership.

Private Placements

The sale of securities directly to a limited number of private investors rather than through a public offering in the open market.

Term Loans

Loans from financial institutions that are provided with a set amount of money and a specified repayment schedule and maturity date.