Banks use gap analysis to measure interest rate risk in their balance sheets. If firm XYZ is said to have a positive gap, this means: Group of answer choices C. Rate-sensitive assets exceed rate-sensitive liabilities B. Long-term assets are funded with short-term liabilities D. Rate-sensitive assets equal rate-sensitive liabilities A. Liabilities reprice before assets

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A: Refinancing risk refers to the risk that a bank's cost of funding (such as the interest rates it…

Q: What differences between the daily market valuation of a traditional security and the valuation…

A: There is need of proper valuation of security there many methods of valuation.

Q: Which of the following is most likely to expose the holders to counterparty credit risk? A.…

A: Counterparty credit risk is the risk where the party involved in the transactions makes default in…

Q: A.Discuss three factors that affect net interest income.B.What are the objectives of the Basel III…

A: Net interest income is the difference between the revenue that is generated from a bank's assets and…

Q: The financial performance of both Commercial Banks and Savings Banks is measured using the Net…

A: The net interest margin is referred as the net benefit of lending which derived from the lending and…

Q: Charecteristics Model approach IN FINANCE, can be used in determining the discount rate in equity…

A: The discount rate in the equity valuation describes the returns in the long term given as a…

Q: Which of the following is not a main core function of the financial system? a. Provide a payments…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Loans Loan Expected Standard Amount Return Deviation A $ 15 8.1% 1.1% million В $ 15 9.2% 1.3%…

A: The following solution is given below:

Q: Value at Risk (VaR) is a statistical measure of maximum loss used by banks and other financial…

A: Value at Risk is a technique used by institutions to analyze the potential risk assessed in the…

Q: A fundamental analyst uses the discounted cashflow method to value firms, and has a short-term…

A: Fundamental Analysis is a technique to value firms on the basis of their fundamentals i.e. their…

Q: 1. Which one of the following is not a money market security: a. Treasury Bill. b. REPO. c. LIBOR.…

A: Money market securities are short term securities or instruments generally issued by government,…

Q: FINANCIAL RISK MANAGEMENT  1. Duration is a measure of interest rates risk. (True/ False) 2. Bond…

A: The answers and explanations are provided below:

Q: A bank has a positive repricing gap. This implies that a. some RSAs are financed by fixed-rate…

A: Banks face different types of risks and repricing risk is one of them. This risk pertains to the…

Q: Direct financing allows a borrower to:

A: Direct financing is a financing approaches in which the borrower (or financer) directly purchases…

Q: Match the best answer to each statement. This category include short-term, highly liquid investment…

A: Current assets refer to the assets of a company that are held for the short term and capable of…

Q: Balance Sheet Insolvency occurs when Liabilities are greater than the Assets resulting in negative…

A: Insolvency Risk: Insolvency risk is a probability that an enterprise cannot satisfy its debt…

Q: The average maturity of its assets is larger than that of its deposits, as is typical of most banks.…

A: “Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: If a bank has a positive repricing gap (RSAs > RSLs), then: Does this bank have reinvestment or…

A: The problem case focuses on identifying the impact of the positive repricing gap on the risk and…

Q: All things considered stable cash flows enable higher debt borrowing.

A: Cashflows: These are movement of the money from various sources like operations, investment…

Q: Bank assets tend to have maturities and _liquidity than bank liabilities O equal; equal Olonger;…

A: Bank assets typically have longer maturities and lower liquidity compared to bank liabilities due to…

Q: Which of the following is not true with Money Market? Select one: O a. Deals in short term funds b.…

A: The money market is a type of financial market that deals with near-term instruments.

Q: b) Why is the risk-adjusted return on capital (RAROC) an important tool in credit risk management…

A: The risk-adjusted return on capital (RAROC) is an important tool in credit risk management for…