Multiple Choice
How do you interpret the position of an FI with a negative on-balance-sheet gap and a positive off-balance-sheet gap?
A) The FI uses its on-balance-sheet activities to hedge its off-balance-sheet activities.
B) The FI uses its off-balance-sheet activities to hedge its on-balance-sheet activities.
C) The FI believes that interest rates will decrease and made a mistake in setting its gap for off-balance-sheet activities.
D) The FI believes that interest rates will decrease and made a mistake in setting its gap for on-balance-sheet activities.
Correct Answer:
Verified
Correct Answer:
Verified
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