For a Bank with a Positive Duration Gap,an Increase in Interest

question 2

Multiple Choice

For a bank with a positive duration gap,an increase in interest rates will

• A)increase the likelihood of insolvency.
• B)decrease the likelihood of insolvency.
• C)not affect the likelihood of insolvency.
• D)result in increased loan trading.

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Definitions:

Adjustment For Expired Insurance

An accounting entry made to allocated insurance premiums that have expired during a period to accurately reflect insurance expense.

Subsidiary Ledger

A detailed ledger supporting a general ledger, containing information on individual accounts like customers or suppliers.

Issued Check

A check that has been written, signed, and released by the drawer but not yet cleared through the banking system.

Advertising Expense

This is the cost associated with promoting products or services to generate sales and increase brand awareness, including media buys, creative costs, and advertising staff salaries.