A Bank Has Liabilities of $4 Million with an Average

question 4

Multiple Choice

A bank has liabilities of $4 million with an average maturity of two years paying interest rates of 4 per cent annually.It has assets of $5 million with an average maturity of five years earning interest rates of 6 per cent annually.To what risk is the bank exposed?

• A)reinvestment risk
• B)refinancing risk
• C)interest rate risk
• D)refinancing risk and interest rate risk

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Definitions:

Effect Size

Effect size is a quantitative measure of the strength of a phenomenon or the magnitude of a difference between groups in an experiment, often used in statistical analysis.

Statistical Significance

Indicates the likelihood that an observed effect or relationship exists because of chance within a predefined level of confidence, typically through a p-value.

Double-Blind Techniques

Research methods used to eliminate bias, in which neither the participants nor the experimenters know who is receiving a particular treatment.

Mastery-Oriented

describes an approach or attitude towards learning and achievement that focuses on gaining competence and understanding material, rather than comparison to others.