An interest-sensitive asset or liability must:
A) have a maturity of less than 90 days.
B) have a rate that shifts in the opposite direction to market changes.
C) have a rate that changes as market conditions alter during the organisation's specified planning period.
D) always be an asset issued for a short-term period.

Question

Quizplus · Accepted Answer

An interest-sensitive asset or liability is one that has a rate that changes as market conditions alter during the organisation's specified planning period. This means that the asset or liability is sensitive to changes in interest rates, and its value or cost will change depending on the prevailing interest rates in the market. It does not necessarily have to have a maturity of less than 90 days or always be an asset issued for a short-term period. It also does not have to have a rate that shifts in the opposite direction to market changes; it could move in the same direction as market changes.

An Interest-Sensitive Asset or Liability Must