Which of the Following Situations Pose a Refinancing Risk for an FI

question 43

Multiple Choice

Which of the following situations pose a refinancing risk for an FI?

• A)An FI issues $10 million of liabilities of one-year maturity to finance the purchase of $10 million of assets with a two-year maturity.
• B)An FI issues $10 million of liabilities of two-year maturity to finance the purchase of $10 million of assets with a two-year maturity.
• C)An FI issues $10 million of liabilities of three-year maturity to finance the purchase of $10 million of assets with a two-year maturity.
• D)An FI matches the maturity of its assets and liabilities.

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Definitions:

Person-In-Situation Schema

A cognitive framework that helps individuals analyze and understand the interaction between personal characteristics and situational factors in influencing behavior.

Knowledge Framework

A structured system of understanding that organizes and categorizes information or concepts to facilitate learning and comprehension.

Sequence Of Events

A chronological order of events or actions that follow each other in a specific setting or narrative.

Projection Effect

Projection effect describes a cognitive bias where individuals assume that others share the same beliefs, attitudes, or feelings as they do.