What Does a Bank's Duration Gap Measure

question 6

Multiple Choice

What does a bank's duration gap measure?

• A) The duration of short-term buckets minus the duration of long-term buckets.
• B) The duration of the bank's assets minus the duration of its liabilities.
• C) The duration of all rate-sensitive assets minus the duration of rate-sensitive liabilities.
• D) The duration of the bank's liabilities minus the duration of its assets.
• E) The duration of all rate-sensitive liabilities minus the duration of rate-sensitive assets.

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Definitions:

Freud

Sigmund Freud, originating from Austria and specializing in neurology, pioneered psychoanalysis, which is a therapeutic procedure for mental health issues conducted through dialogue between psychoanalysts and their patients.

B.F. Skinner

A prominent American psychologist known for his work in behaviorism and for developing the theory of operant conditioning.

Behaviorism

A theory of learning based on the idea that all behaviors are acquired through conditioning processes, focusing on observable behaviors and disregarding mental activities.

Cognitive School

The cognitive school of thought in psychology focuses on the study of mental processes including perception, memory, judgment, and reasoning.