If a bank has a positive IS gap and interest rates are rising, possible management response likely is to:

1. Decrease interest sensitive assets.
2. Increase interest sensitive liabilities.
3. Do nothing
4. Either (a) or (b).

2. Gap management techniques require management to perform an analysis of:

1. Comparing gap between interest sensitive assets and interest sensitive liabilities for two years
2. Maturities opportunities associated with interest bearing assets with interest bearing liabilities
3. Repricing opportunities associated with interest bearing assets with interest bearing liabilities
4. Both (b) and (c)

3. Changing interest rates impact:

a. The income statement of financial institutions

2. Financial institutions inability to generate a profit
3. The balance sheet of the financial institutions
4. Both (a) and (c)

4. Net interest margin is influenced by:

1. Changes in interest rates up or down
2. Changes in volume of interest-sensitive assets and liabilities
3. Changes in the mix of assets and liabilities
4. All of the above

5. A financial institution is insulated from interest-rate risk if:

a. All assets are nonrepriceable

b. All liabilities are repriceable

c. IS ratio is 1.0

d. The institution ensures that they promote variable rate loans and fixed rate deposits