Which of the Following Is not a Characteristic of a Typical

question 76

Multiple Choice

Which of the following is not a characteristic of a typical commercial bank?

• A) Most banks own few fixed assets.
• B) Most banks have a high degree of operating leverage.
• C) Most banks have few fixed costs.
• D) Many bank liabilities are payable on demand.
• E) Banks generally operate with less equity capital than non-financial firms.

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Definitions:

Put Option

A financial contract allowing the holder to sell a specific amount of an underlying asset at a predetermined price within a specified time frame.

Hedge Ratio

A ratio used to calculate the amount of derivatives needed to hedge a position or portfolio, often used to minimize risk exposure.

Delta

A measure in financial markets that compares the change in the price of a derivative to the change in the price of its underlying asset.

Gamma

A measure of the rate of change in an option's delta for a one-unit change in the price of the underlying asset.