A bank manager would want to set the repricing gap greater than zero when interest rates are expected to rise.
True/False and why
True
Because when repricing gap is positive, interest income will rise
by more than interest expense thus resulting in an increase in net
income
A bank manager would want to set the repricing gap greater than zero when interest rates...
A bank manager would want to set the duration gap greater than zero when interest rates are expected to rise. True or False True False
In a period of Inflation real interest rates will be greater than nominal interest rates. O True O False
assume you are the manager of an FI. how would you steucture your balance sheet using the repricing gap model if you expected i terest rates to increase? why? negative gap or positive gap and why
Risk Bank has a negative GAP position. If a parallel shift upward in interest rates occurs, the bank’s net interest income would be expected to: Question 23 options: Decrease by an amount equal to GAP Decrease by an amount equal to GAP times the change in rates Increase by an amount equal to GAP Increase by an amount equal to GAP times the change in rates
If interest rates are falling, and Interest Sensitive Liabilities are greater than Interest Sensitive Assets, is this favorable or unfavorable to the bank? Why?
In a rising market interest rate environment, bank management's most likely action will be to: a. Decrease interest-sensitive assets. b. Increase interest-sensitive liabilities. c. Increase interest-sensitive assets. d. Have a higher negative relative IS gap. 2. A bank that is liability-sensitive will have: a. A positive impact on net interest income if interest rates fall. b. A negative impact on net interest income if interest rates rise. c. A positive impact on net interest income if interest rates rise. d....
11. If interest rates are falling, and Interest Sensitive Liabilities are greater than Interest Sensitive Assets, is this favorable or unfavorable to the bank? (2) Why? (3) 12. When dealing with Structure of Funds Management, what are the three (3) Types of Deposits that Banks have to manage? Name them, and briefly describe each. (6) a) b) c) 13. What is Securitization? (2) 14. Name two (2) reasons why Banks use Securitizations? (4) 15. What is CDARS (2)? What is...
When the value of income elasticity of demand is greater than zero, the good is called normal good. Select one: a. False b. True
1) What is the bank's gap?
2) What is the bank’s expected NII if interest rates and portfolio
composition remain constant during the year?
3) True or False: This bank is positioned to profit if rates
decrease.
Use the following table to answer the remaining questions. Assets Amount ($M) Rate Liabilities & Equity Amount ($M) Ra Rate Sensitive 600 3% Rate Sensitive Fixed Rate 150 4% Fixed Rate 2% Nonearning 50 Nonpaying liabilities & equity Total 800 Total
If the marginal propensity to consume is greater than zero but less than one, when disposable income rises by $1, consumption will: Orise by less than $1. not be affected O rise by more than $1. O rise by exactly $1.