In Order to Achieve a Zero Duration Gap, an FI

question 23

Multiple Choice

In order to achieve a zero duration gap, an FI can:

• A)change the duration of its assets only
• B)change the duration of its liabilities only
• C)change the duration of both, assets and liabilities
• D)All of the listed options are correct.

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Definitions:

Top-Down Analysis

An investment analysis approach that starts with the broader economy before drilling down to sector and individual company analysis.

Broad Economic Environment

Refers to the overall conditions affecting economic activity, including monetary policy, fiscal policy, and external factors like global markets.

Interest-Rate Movements

Changes in the interest rate level determined by central banks that affect borrowing costs, investment returns, and economic activity across various sectors.

Rivalry

Competition between companies in the same industry aimed at achieving higher sales, market share, and recognition by consumers.