How Can a Negative Duration Gap of 0

question 30

Multiple Choice

How can a negative duration gap of 0.21 years be interpreted?

• A)The FI is exposed to decreasing interest rates because it has a negative duration gap of 0.21 years.
• B)The FI is exposed to increasing interest rates because it has a negative duration gap of 0.21 years.
• C)The FI is not exposed to interest rate changes since it is running a matched book.
• D)The FI's exposure will depend on its maturity gap.

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Definitions:

Correlated

When two or more variables are related in some manner, indicating a statistical relationship.

Ambivalence

The state of having mixed feelings or contradictory ideas about something or someone.

Attitude And Behaviour

Refers to the connection between one's personal feelings or beliefs (attitude) and the way one acts or reacts (behaviour).

Situational Norms

Socially accepted behaviors that vary depending on context and environment.