Question 1

Interest rate risk and liquidity risk are:

Accepted Answer

A)  unrelated to one another 
B)  closely related to one another 
C)  only related to one another when interest rate levels are high 
D)  only related to one another when interest rate levels are low 
A)  unrelated to one another 
B)  closely related to one another 
C)  only related to one another when interest rate levels are high 
D)  only related to one another when interest rate levels are low

Question 2

Dollar (or funding on maturity) gap management focuses on the repricing characteristics of assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 3

A bank can increase the interest sensitivity of its assets by doing all BUT which of the following:

Accepted Answer

A)  selling federal funds 
B)  purchasing short-term Treasury bills 
C)  purchasing federal funds 
D)  purchasing short-term federal agency securities 
E)  making deposits at other banks 
A)  selling federal funds 
B)  purchasing short-term Treasury bills 
C)  purchasing federal funds 
D)  purchasing short-term federal agency securities 
E)  making deposits at other banks

Question 4

Which of the following is (are) a good reason(s) for accepting some amount of interest rate risk?

Accepted Answer

A)  bank risk can be hedged 
B)  bank profit can be increased 
C)  demands by bank customers must be met as much as possible 
D)  b and c 
E)  a, b, and c 
A)  bank risk can be hedged 
B)  bank profit can be increased 
C)  demands by bank customers must be met as much as possible 
D)  b and c 
E)  a, b, and c

Question 5

First Pennsylvania's collapse was due to a _______________ and _________interest rates.

Accepted Answer

A)  large positive gap/increasing 
B)  large positive gap/decreasing 
C)  large negative gap/increasing 
D)  large negative gap/decreasing 
A)  large positive gap/increasing 
B)  large positive gap/decreasing 
C)  large negative gap/increasing 
D)  large negative gap/decreasing

Question 6

Interest rates are generally increasing in the expansion phase of the business cycle, and the yield curve usually becomes more steeply sloped.

Accepted Answer

A) True 
 B)False

Question 7

Interest rate risk and liquidity risk are usually inversely related.

Accepted Answer

A) True 
 B)False

Question 8

The standardized gap adjusts for:

Accepted Answer

A)  different interest rate levels of different asset and liabilities items 
B)  different maturity ranges of different asset and liability items 
C)  different liquidity of different asset and liability items 
D)  different interest rate volatilities of different asset and liability items 
A)  different interest rate levels of different asset and liabilities items 
B)  different maturity ranges of different asset and liability items 
C)  different liquidity of different asset and liability items 
D)  different interest rate volatilities of different asset and liability items

Question 9

First Pennsylvania Corporation "bet the bank" on an interest rate forecast by increasing its holdings of:

Accepted Answer

A)  short-term securities 
B)  short-term loans 
C)  long-term securities 
D)  long-term loans 
A)  short-term securities 
B)  short-term loans 
C)  long-term securities 
D)  long-term loans

Question 10

A bank with a positive duration gap would experience an increase in the market value of equity with rising interest rates.

Accepted Answer

A) True 
 B)False

Interest rate risk and liquidity risk are:

Dollar (or funding on maturity) gap management focuses on the repricing characteristics of assets and liabilities.

A bank can increase the interest sensitivity of its assets by doing all BUT which of the following:

Which of the following is (are) a good reason(s) for accepting some amount of interest rate risk?

First Pennsylvania's collapse was due to a _______ and _interest rates.

Interest rates are generally increasing in the expansion phase of the business cycle, and the yield curve usually becomes more steeply sloped.

Interest rate risk and liquidity risk are usually inversely related.

The standardized gap adjusts for:

First Pennsylvania Corporation "bet the bank" on an interest rate forecast by increasing its holdings of:

A bank with a positive duration gap would experience an increase in the market value of equity with rising interest rates.

Functions and Forms of Banking

The Bank Regulatory Environment

Evaluating Bank Performance

Bank Valuation

Techniques of Assetliability Management: Futures, Options, and Swaps

Investment Management

Credit Evaluation Process

Commercial and Industrial Lending

Real Estate and Consumer Lending

Liquidity Management

Capital Management

Managing Liabilities

Off-Balance Sheet Activities

Securities, Investment Insurance Products

Other Financial Services

Electronic Banking

Global Financial Services

Filters

Exam 5: An Overview of Assetliability Management Alm

Interest rate risk and liquidity risk are:

Dollar (or funding on maturity) gap management focuses on the repricing characteristics of assets and liabilities.

A bank can increase the interest sensitivity of its assets by doing all BUT which of the following:

Which of the following is (are) a good reason(s) for accepting some amount of interest rate risk?

First Pennsylvania's collapse was due to a _______________ and _________interest rates.

Interest rates are generally increasing in the expansion phase of the business cycle, and the yield curve usually becomes more steeply sloped.

Interest rate risk and liquidity risk are usually inversely related.

The standardized gap adjusts for:

First Pennsylvania Corporation "bet the bank" on an interest rate forecast by increasing its holdings of:

A bank with a positive duration gap would experience an increase in the market value of equity with rising interest rates.

Functions and Forms of Banking

The Bank Regulatory Environment

Evaluating Bank Performance

Bank Valuation

Techniques of Assetliability Management: Futures, Options, and Swaps

Investment Management

Credit Evaluation Process

Commercial and Industrial Lending

Real Estate and Consumer Lending

Liquidity Management

Capital Management

Managing Liabilities

Off-Balance Sheet Activities

Securities, Investment Insurance Products

Other Financial Services

Electronic Banking

Global Financial Services

Filters

First Pennsylvania's collapse was due to a _______ and _interest rates.