A Bank Has a Positive Repricing Gap Using a Six-Month

question 26

Multiple Choice

A bank has a positive repricing gap using a six-month maturity bucket. Which one of the following statements is most correct?

• A)If all interest rates are projected to increase,to limit a profit decline when this occurs,the bank could encourage its retail loan customers to switch from one-year adjustable rate loans to Fed funds loans.
• B)If all interest rates are projected to decrease,to limit a profit decline when this occurs,the bank could encourage its retail loan customers to switch from one-month reset floating rate loans to three-year fixed-rate loans at current rates.
• C)If all interest rates are projected to decrease,to limit a profit decline when this occurs,the bank could encourage its retail loan customers to switch from fixed-rate mortgages to adjustable rate mortgages.
• D)If all interest rates are projected to increase,to limit a profit decline when this occurs,the bank could encourage its retail loan customers to switch from three-year to five-year auto loans.
• E)If all interest rates are projected to decrease,to limit a profit decline when this occurs,the bank could encourage its retail loan customers to switch from their bank to another bank.

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Definitions:

Allele

One of two or more alternative forms of a gene that arise by mutation and are found at the same place on a chromosome.

Sickle-cell Anemia

A genetic blood disorder caused by the presence of an abnormal form of hemoglobin, leading to misshapen red blood cells.

Frequencies

The rate at which a repeating event occurs, such as the number of cycles of a wave per second in physics or the occurrence of a gene variant within a population in genetics.

Sickle-cell Anemia

A hereditary blood disorder characterized by abnormal, sickle-shaped red blood cells, resulting in chronic anemia and other health issues.