A1) For a given financial institution, its Income Gap and its Duration Gap always have the opposite sign. True or False A2) Duration Gap helps find the change in a______, whereas Income Gap analysis finds the change in b______. a. expense on liability, b. income from asset b. net worth, b. asset value c. net worth, b. income from assets d. asset value, b. liability value A3) In an interest rate swap, a RSA- financial institution such as the Friendly Finance Company would swap away _a___ in favour of _b___ in a contract. (RSA:r ate sensitive assets, FRA: fixed rate assets) A . RSA, b. FRA B . FRA, b. FRA C . RSA, b. RSA D . FRA. b. RSA A4)An interest rate swap designed to reduce the level of bank interest rate risks also guarantees profits at the same time. True or False A5)An interest rate swap designed to reduce the level of bank interest rate risks involves swapping A)only the underlying principal B)both the income flow and the principal C)none D)only the flow of income on an underlying principal
A1) For a given financial institution, its Income Gap and its Duration Gap always have the opposite sign.
True or False
A2) Duration Gap helps find the change in a______, whereas Income Gap analysis finds the change in b______.
a. expense on liability, b. income from asset
b. net worth, b. asset value
c. net worth, b. income from assets
d. asset value, b. liability value
A3) In an interest rate swap, a RSA- financial institution such as the Friendly Finance Company would swap away _a___ in favour of _b___ in a contract. (RSA:r ate sensitive assets, FRA: fixed rate assets)
A . RSA, b. FRA
B . FRA, b. FRA
C . RSA, b. RSA
D . FRA. b. RSA
A4)An interest rate swap designed to reduce the level of bank interest rate risks also guarantees profits at the same time.
True or False
A5)An interest rate swap designed to reduce the level of bank interest rate risks involves swapping
A)only the underlying principal
B)both the income flow and the principal
C)none
D)only the flow of income on an underlying principal
Step by step
Solved in 6 steps
