The GAP Ratio

question 47

Multiple Choice

The GAP ratio:

• A) is always greater than one for bank's with a negative periodic GAP.
• B) is equal to the volume of rate-sensitive liabilities times the volume of rate-sensitive assets.
• C) is equal to the volume of rate-sensitive liabilities divided by the volume of rate-sensitive assets.
• D) is equal to the volume of rate-sensitive assets divided by the volume of rate-sensitive liabilities.
• E) is always less than one for bank's with a positive cumulative GAP.

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Definitions:

Artificially Scarce

A situation where the supply of a good is limited by factors other than its physical scarcity, often due to regulatory or monopolistic practices.

Excludable

Referring to a good, describes the case in which the supplier can prevent those who do not pay from consuming the good.

Nonrival

A property of a good or service where its consumption by one individual does not reduce availability for others, often found in public goods.

Private Good

A good that is both excludable and rivalrous, meaning it can only be used by one person at a time, and access to it can be restricted.