6. Durango Bank has $2 million in rate-sensitive liabilities and $3 million in rate-sensitive assets. Durango's gap is and Durango is probably more concerned about a(n) in interest rates. a. -$1 million; increase b. -$1 million; decrease c. $1 million; increase d. $1 million; decrease e. None of the above. 7. Which of the following is a method that a bank can use to reduce its credit risk? diversifying its loans across industries focusing on credit card loans focusing on consumer loans selling its holdings of Treasury securities All of the above. a. b. c. d. e. 8. Interest income generated from all a bank's assets is called a. net interest margin. b. the spread. c. gross interest income. d. net interest income. c. None of the above. 9. Interest paid on deposits and borrowed funds is called a. net interest expense. b. net interest margin. c. gross interest expense. d. net spread expense. e. None of the above. 10. The loan loss provision should increase during periods when loan losses are more likely, such as during a recessionary period. a. True b. False 11. The value of a commercial bank can be modeled as the present value of its future cash flows. a. True b. False 12. When a corporation first decides to issue stock to the public, it engages in a(n) a. secondary offering b. initial public offering. c. seasoned equity offering. d. None of the above