The Bank Has a Negative Repricing Gap

question 18

Multiple Choice

The bank has a negative repricing gap.Is it exposed to interest rate increases or decreases and why?

• A)Interest rate increases because the interest income on its assets will rise more than the interest expenses on its liabilities and net interest income will rise.
• B)Interest rate increases because the interest income on its assets will rise by less than the interest expenses on its liabilities and net interest income will fall.
• C)Interest rate decreases because the interest income on its assets will rise more than the interest expenses on its liabilities and net interest income will rise.
• D)Interest rate decreases because the interest income on its assets will rise by less than the interest expenses on its liabilities and net interest income will fall.

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