If an FI's repricing gap is less than zero,then
A)it is deficient in its required reserves.
B)it is deficient in its capital ratio requirement.
C)its liability costs are more sensitive to changing market interest rates than are its asset yields.
D)its liability costs are less sensitive to changing market interest rates than are its asset yields.

Question

Quizplus · Accepted Answer

If an FI's repricing gap is less than zero, it means that its liability costs are more sensitive to changing market interest rates than its asset yields. This can make the FI vulnerable to interest rate risk, as a change in interest rates could negatively impact its profitability. It does not indicate deficiencies in required reserves or capital ratio requirements.

If an FI's Repricing Gap Is Less Than Zero,then