The duration of an asset or a liability for which there are intervening cash flows between issue and maturityA.is smaller than the asset or the liability's maturityB.can be equal to or smaller than the asset or the liability's maturityC.equals the asset or the liability's maturityD.exceeds the asset or the liability's maturityE.can be equal to or greater than the asset or the liability's maturity

Which of the following statements is TRUE?A.Duration is the weighted-average time to maturity on the loan using the present values of the cash flows as weights.B.An FI can immunize its portfolio by matching the maturity of its asset with its liabilities. C.The smaller the leverage-adjusted duration gap, the more exposed the FI is to interest rate shocks. D.The larger the numerical value of duration, the more sensitive is the price of that asset or liability to changes or shocks in interest rates.E.Setting the duration of the assets higher than the duration of the liabilities will exactly immunize the net worth of an FI from interest rate shocks.

Which of the following statements is FALSE?A.For a given maturity fixed-income asset, duration decreases as the market yield increases. B.Duration of a zero coupon bond is equal to the bond's maturity. C.Duration considers the timing of all the cash flows of an asset by summing the product of the cash flows and the time of occurrence. D.The economic meaning of duration is the interest elasticity of a financial asset’s price. E.Duration increases with the maturity of a fixed-income asset at a decreasing rate.

Which of the following statements is TRUE with regard to the following statement: Immunizing the balance sheet to protect equity holders from the effects of interest rate risk occurs when A.When the modified duration is equal to the dollar duration.B.the effect of a change in the level of interest rates on the value of the assets of the FI is exactly offset by the effect of the same change in interest rates on the liabilities of the FI.C.the maturity gap is zero, so that all assets have a matching-maturity liability.D.the modified duration gap of the balance sheet is zero.E.the repricing gap is zero, so that all assets have a matching liability that reprices at the same time.

Which of the following statements is FALSE?A.The maturity bucket is the time window over which the dollar amounts of assets and liabilities are measured.B.If an FI wants to increase its repricing gap, it can replace its equity with demand deposits.C.If an FI wants to increase its repricing gap, it can replace fixed-rate loans with rate-sensitive loans.D.The repricing gap is a measure of the difference between the dollar value of assets that will reprice and the dollar value of liabilities that will reprice within a specific time periodE.According to the CGAP effect, when CGAP is positive the change in net interest income is positively related to the change in interest rates.

The concept of limited liability ordains that the liability of members is limited by the ____ to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound upQuestion 8Answera.memorandumb.constitutionc.articlesd.resolution