Exam 23: Risk Management in Financial Institutions

Provisions in loan contracts that proscribe borrowers from engaging in specified risky activities are called ________.

If a rise in interest rates causes the market value of a bank's net worth to rise,then the bank must have a ________.

A bank's commitment (for a specified future period of time)to provide a firm with loans up to a given amount at an interest rate that is tied to a market interest rate is called

Because borrowers,once they have a loan,are more likely to invest in high-risk investment projects,banks face the

If a bank has a negative gap,then a decrease in interest rates will increase income.

Deciding on how good a risk you is entirely scientific,based on your credit score.

Table 23.1 First National Bank -Referring to Table 23.1,First National Bank has a gap of ________.

If a bank has a duration gap of 2 years,then a rise in interest rates from 6 percent to 9 percent will lead to

If a bank has more rate-sensitive assets than rate-sensitive liabilities,then a(n)________ in interest rates will ________ bank profits.