Managing a banks maturity gap is concerned with managing _____. A. a bank's assets B. a...
Managing a banks maturity gap is concerned with managing _____.
- A. a bank's assets
- B. a bank's liabilities
- C. federal funds
- D. relative levels of rate-sensitive assets and liabilities
- E. credit risk of a bank's loan portfolio
Homework Answers
Maturity Gap is a measure for risks related to interest rate for assets and liabilities that are risk sensitive. When the interest rates change then the assets (which are mostly loans for banks )and liabilities ( which are mostly deposits) are repriced for a bank and interest income and interest expenses change accordingly.
A. Wrong. The relative levels of assets as well as liabilities are managed while managing maturity gap.
B. Wrong. Same reason as A.
C. Wrong. Federal funds are money which banks deposit at the Reserve bank.
D. Correct. Managing this is important for managing maturity gap.
E. Wrong. Relative levels of liabilities are also important.
Thua, correct option is D.
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Managing a banks maturity gap is concerned with managing
_____.
A. a bank's assets
B. a...
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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.
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