Question

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

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

Added by Whitney B.

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