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:

Per-capita GNI

The gross national income of a country divided by its population, reflecting the average income of its citizens.

GDP

Gross Domestic Product, the total value of all goods and services produced within a country's borders in a given time period.

Agriculture Production

Refers to the process of producing food, fiber, and other desired products by the cultivation of certain plants and the raising of domesticated animals (livestock).

Remittances

amounts of money sent by migrants to their home country, often serving as a significant source of family and national income in many countries.