If a Bank Has Assets with the Same Time to Maturity

question 27

Multiple Choice

If a bank has assets with the same time to maturity as its liabilities, then

• A)the interest rate on assets changes faster than the interest rate on liabilities.
• B)the interest rate on liabilities changes faster than the interest rate on assets.
• C)changes in interest rates will not affect the bank's overall portfolio.
• D)changes in interest rates puts the bank at a high risk of default.

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Definitions:

Possible Routes

Potential paths or methods that can be taken in a process or towards a destination.

Northwest Corner Rule

An allocation technique used in transportation and logistics to minimize costs by initially assigning shipments to the cheapest routes starting from the northwest corner of a cost matrix and proceeding accordingly.

Intuitive Method

A cost-based approach to finding an initial solution to a transportation problem.

Improvement Index

An indicator or metric used to quantify the level of improvement in a process, product, or service over time.