Which of the Following Statements Most Appropriately Responds to the Critique

question 63

Multiple Choice

Which of the following statements most appropriately responds to the critique that duration matching is costly and time consuming?

• A)The critique is valid; however, the speed has been eased and transaction costs of balance sheet restructuring have been lowered due to growth of purchased funds, asset securitisation and loan sales markets.
• B)The critique is valid and FIs should spend funds in order to develop more efficient interest rate risk management tools.
• C)The critique is valid, particularly because it is not possible for managers to get the same results of direct duration matching by taking positions in derivatives markets.
• D)None of the listed options are correct.

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Definitions:

Benzoyl Chloride

A reactive organic compound used in organic synthesis, characterized by a benzene ring attached to a carbonyl chloride group.

Pka Values

A quantitative measure that indicates the strength of an acid in solution, representing the acid's ability to donate a proton.

Equilibrium

A state in a chemical reaction where the rates of the forward and reverse reactions are equal, leading to no net change in the concentrations of reactants and products.

Aldol Condensation

A chemical reaction that combines two aldehyde or ketone molecules to form a larger β-hydroxyketone, followed typically by dehydration to yield a conjugated enone.