Which of the Following Statements Is True

question 20

Multiple Choice

Which of the following statements is true?

• A)One problem with the repricing gap is over-aggregation, which means that while the dollar value of asset-sensitive liabilities and assets within one bucket might be the same, the repricing timing for assets and liabilities within this bucket might differ.
• B)One problem with the repricing gap is over-aggregation, which means that managers cannot make informed decisions about interest rate movements.
• C)An advantage of the repricing gap is over-aggregation, which means that the information provided in the buckets is precise.
• D)None of the listed options are correct.

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Definitions:

General Revenue Sharing

A form of federal monetary aid that is given to states and municipalities with minimal restrictions on how it can be spent.

Means Testing

A procedure to determine eligibility for certain forms of financial aid or social services based on the income and assets of an applicant.

Indexing

The practice of adjusting financial figures or static amounts by a designated benchmark or index to reflect changes in economic indicators.

Categorical Grants

Federal funds provided to states and localities, earmarked for specific, narrowly defined purposes, usually with conditions attached.