Concept Questions (3 points sach) 1. The risk that anvestor will be forced to place wigs from a los lower yielding investment is known as A liquidity risk B. reinvestment risk C credit risk D foreign exchange risk E off-balance-sheet risk the 2. The repricing gap approach calculates the gaps in each maturity bucket by subtracting A current assets from the current liabilities B. long term liabilities from the fixed assets C. rate-sensitive assets from the total assets. D. rate-sensitive liabilities from the rate-sensitive assets E. current liabilities from tangible assets 3. Can an Fl immunize itself against interest rate risk exposure even though its maturity gap is not zero? A. Yes, because with a maturity gap of zero the change in the market value of assets exactly offsets the change in the market value of liabilities B. No, because with a maturity gap of zero the change in the market value of assets exactly offsets the change in the market value of liabilities C. Yes, because the maturity model does not consider the timing of cash flows and the duration model can be used D. No, because the timing of cash flows is relevant to immunization against interest rate risk exposure. E. No, because a representative bank will always have a positive maturity gap 4. The yield curve A relates rates for different maturities of assets. B. for U.S. Treasury securities is the most commonly reported yield curve. C. may change shape over time. D. which is inverted typically does not last long but signals likely recession. E. All of the options