If the Maturity of a Bank's Assets Is Much Longer

question 27

Multiple Choice

If the maturity of a bank's assets is much longer than the maturity of its liabilities and it wants to limit its interest rate risk, the bank may ________.

• A) prefer to invest in long-term bonds in its asset portfolio
• B) prefer to invest in equities in its asset portfolio
• C) prefer to invest in variable-rate assets
• D) decide to increase its fixed-rate mortgage holdings

Understand the historical context and development of banking.

Identify the roles and jobs of money in an economy.

Describe the Keynesian motives for holding money.

Differentiate between what is considered money and what is not in the economy.

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Definitions:

Modeling Desirable Behavior

Demonstrating behaviors that are positive or beneficial, encouraging others to emulate these actions.

Social Skills

The abilities necessary for effective interpersonal behavior and communication.

Etiquette

The customary code of polite behavior in society or among members of a particular profession or group.

Invisible

Anything that cannot be seen or perceived visually, often due to being intangible or hidden.