Question 12 pts

What is the advantage of using the Gap analysis technique in measuring interest risks of banks?

Group of answer choices

it is simple and precise

it is simple

it is accurate

it is difficult

Question 31 pts

In an interest rate swap, a RSA-rich financial institution such as the First National Bank would swap away ___a___ in favor of ___b___ in a contract. (RSA:r ate sensitive assets, FRA: fixed rate assets)

A a. RSA, b. FRA

B a. FRA, b. FRA

C a. RSA, b. RSA

D a. FRA. b. RSA

Group of answer choices

A

C

B

D

An interest rate swap designed to reduce the level of bank interest rate risks involves swapping

________________________________________________.

Group of answer choices

only the underlying principal

both the income flow and the principal

none

only the flow of income on an underlying principal

Question 111 pts

Use the balance sheet of a bank below to answer the following. Current interest rate is 10%; the duration of asset is 1.5 years, the duration of liabilities 2 years.

Assets _Liabilities_______________________

Required Reserves 8 m Money Market Deposits 50 m

Excess Reserves 7 m 3-year CDs 60 m

T-bills 85 m Capital 10 m

Mortgages 15m

Commercial Loans 5

What happens to the value of liability if the interest rate goes down by 1%?

Group of answer choices

up by 1.81%

down by 1.81%

down by 1.36%

up by 1.36%

Question 121 pts

Use the balance sheet of a bank below to answer the following. Current interest rate is 10%; the duration of asset is 1.5 years, the duration of liabilities 2 years.

Assets _Liabilities_______________________

Required Reserves 8 m Money Market Deposits 50 m

Excess Reserves 7 m 3-year CDs 60 m

T-bills 85 m Capital 10 m

Mortgages 15m

Commercial Loans 5m

How much is the income gap?

Group of answer choices

50 m

negative 10 m

40 m

negative 50 m

Question 201 pts

Regulation Q is an

A. Interest Rate Floor

B. Interest Rate Ceiling

C. Interest Rate Derivative

D. Interest Rate Game

Group of answer choices

A

B

C

D