How Do You Interpret the Position of an FI with a Positive

question 35

Multiple Choice

How do you interpret the position of an FI with a positive on-balance-sheet gap and a negative off-balance sheet gap?

• A)The FI uses its on-balance-sheet activities to hedge its off-balance-sheet activities.
• B)The FI uses its off-balance-sheet activities to hedge its on-balance-sheet activities.
• C)The FI believes that interest rates will increase and made a mistake in setting its gap for off-balance-sheet activities.
• D)The FI believes that interest rates will increase and made a mistake in setting its gap for on-balance-sheet activities.