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© 2014 Pearson Canada Inc.$13.7 Appendix 13.1: Measuring Bank Performance
Most of a bank's operating income results from ____.
A) interest on assets
B) service charges on deposit accounts
C) off-balance-sheet activities
D) fees from standby lines of credit
Answer: A
Diff: 1 Type: MC Page Ref: 13.2A- 2
Topic: Questions for Web Appendix on Measuring Bank Performance
Skill: Recall
Objective List: 13.2 Specify how banks make profits by accepting deposits and making loans
Assume a bank has $200 million of assets with a duration of 2.5, and $190 million of
liabilities with a duration of 1.05. The duration gap for this bank is ____.
A) 0.5 year
B) 1 year
C) 1.5 years
D) 2 years
Answer: C
Diff: 2 Type: MC Page Ref: 13.2A- 2
Topic: Questions for Web Appendix on Duration Gap Analysis
Skill: Applied
Objective List: 13.4 Explain gap analysis and duration analysis
One of the problems in conducting a duration gap analysis is that the duration gap is
calculated assuming that interest rates for all maturities are the same. That means that the yield
curve is ____.
A) flat
B) slightly upward sloping
C) steeply upward sloping
D) downward sloping
Answer: A
Diff: 3 Type: MC Page Ref: 13.2A- 2
Topic: Questions for Web Appendix on Duration Gap Analysis
Skill: Applied
Objective List: 13.4 Explain gap analysis and duration analysis