A Bank Has a Negative Duration Gap

question 39

Multiple Choice

A bank has a negative duration gap. Interest rates decline. Which one of the following best describes the effects of the interest rate change?

• A)The bank's market value of equity is unchanged since the market value of its assets and liabilities moves in the same direction.
• B)The bank's market value of equity goes up because the market value of its assets goes up by more than the market value of its liabilities goes down.
• C)The bank's market value of equity goes down because the market value of its assets goes up by more than the market value of its liabilities goes down.
• D)The bank's market value of equity goes down because the market value of its assets goes down by more than the market value of its liabilities goes down.
• E)The bank's market value of equity goes down because the market value of its liabilities increases by more than the market value of its assets increases.

---

Definitions:

Speech Recognition Software

A program designed to recognize and interpret human speech, allowing users to input data or commands by speaking rather than typing.

Printed

The output of a document, image, or data on paper or other material through a printer.

Network Standards

Regulations and protocols established to ensure consistent and compatible communication and operation within computer networks.

Data Transmission

The process of sending digital or analog data over a communication medium from one system to another.