If a Bank Expects Interest Rates to Decrease in the Coming

question 19

Multiple Choice

If a bank expects interest rates to decrease in the coming year, it should:

• A) increase its GAP.
• B) issue long-term subordinated debt today.
• C) increase the rates paid on long-term deposits.
• D) issue more variable rate loans.
• E) become more liability sensitive.

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Definitions:

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