8-47 What Is Spread Effect

question 7

Multiple Choice

8-47 What is spread effect?

• A)Periodic cash flow of interest and principal amortization payments on long-term assets that can be reinvested at market rates.
• B)The effect that a change in the spread between rates on RSAs and RSLs has on net interest income as interest rates change.
• C)The effect of mismatch of asset and liabilities within a maturity bucket.
• D)The premium paid to compensate for the future uncertainty in a security's value.
• E)The value of an FI to its owners.

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Definitions:

Positively Charged

Having a greater number of protons than electrons, resulting in an electric charge that is positive.

Sympathetic Components

Parts of the sympathetic nervous system, a branch of the autonomic nervous system responsible for the body's 'fight or flight' response.

Parasympathetic Components

Components of the parasympathetic nervous system, which helps to conserve energy and restore the body to a state of calm after periods of stress or danger.

Peripheral Nervous System

The part of the nervous system that lies outside the brain and spinal cord, responsible for transmitting information between the central nervous system and the rest of the body.