Risk Bank has a negative GAP position. If a parallel shift upward in interest rates occurs,...
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:
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Decrease by an amount equal to GAP |
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Decrease by an amount equal to GAP times the change in rates |
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Increase by an amount equal to GAP |
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Increase by an amount equal to GAP times the change in rates |
Homework Answers
IF GAP IS NEGATIVE, THEN THERE WILL BE INVERSE RELATIONSHIP BETWEEN CHANGE IN INTEREST RATE AND NET INTEREST INCOME
SO IF INTEREST RATE INCREASES, NET INTEREST INCOME (NII) WILL DECREASE
NII WILL DECREASE BY = NEGATIVE GAP X INCREASE IN RATE
ANSWER : Decrease by an amount equal to GAP times the change in rates [Thumbs up please]
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