9-67 Which of the Following Statements Is True

question 109

Multiple Choice

9-67 Which of the following statements is true?

• A)The optimal duration gap is zero.
• B)Duration gap measures the impact of changes in interest rates on the market value of equity.
• C)The shorter the maturity of the FI's securities,the greater the FI's interest rate risk exposure.
• D)The duration of all floating rate debt instruments is equal to the time to maturity.
• E)The duration of equity is equal to the duration of assets minus the duration of liabilities.

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Definitions:

AGI

Adjusted Gross Income, a measure of income calculated from your gross income and used to determine how much of your income is taxable.

Qualified Mortgage Interest

Interest paid on a mortgage that is eligible for tax deduction within the limits set by the IRS.

At-risk Rules

These are tax rules designed to limit the amount of deductible losses from businesses or income-producing activities to the amount the taxpayer has at risk.

Passive Loss Rules

Tax regulations that limit the amount of losses investors can deduct from passive activities, including some investments in real estate.