The Structure of a Bank's Balance Sheet as Evidenced by Its

question 20

Multiple Choice

The structure of a bank's balance sheet as evidenced by its repricing gap and its duration gap affects a bank's sensitivity to interest rate changes. Which one of the following statements about the two types of gaps is true?

• A)The repricing gap immunizes the present value of all future cash flows,whereas managing the duration gap can stabilize future cash flows,but not their present value.
• B)The duration gap considers all cash flows up to and including maturity,whereas the repricing gap really only considers how cash flows will change within the maturity bucket.
• C)If a bank could only manage one type of gap,the bank would limit its interest rate risk the most by managing its repricing gap instead of its duration gap.
• D)The repricing gap is superior to the duration gap since the repricing gap has a well-defined maturity bucket.
• E)It is virtually impossible for an institution to have both a positive duration gap and a negative repricing gap at the same time.

Identify and apply the conditions required for the distribution of discrete random variables.

Interpret the mean and its implications in real-world contexts for various distributions.

Distinguish between the mean, variance, and standard deviation in the context of probability distributions.

Understand the principles and mechanisms of Claisen condensation reactions.

---

Definitions:

Birch Stand

A group or cluster of birch trees growing together.

Underground Aquifers

Geological formations that can store, transmit, and yield groundwater to wells and springs.

Water Logging

The saturation of soil with water, often leading to reduced plant growth and agriculture problems.

Human Caused

Refers to events, conditions, or changes that are directly attributed to human actions or activities.