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If a Bank Has Long-Term Fixed-Rate Assets and Short-Term Liabilities

Question 22

Multiple Choice

If a bank has long-term fixed-rate assets and short-term liabilities, and interest rates increase over time, its net interest margin should


A) decrease.
B) increase.
C) stay the same.
D) EITHER decrease OR increase, depending on whether the asset maturities exceed 10 years.

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