The duration gap can be used to measure how changes in the interest rate affect an FI's:
A)net worth
B)maturity gap strategy
C)liquidity strategy
D)All of the listed options are correct.

Question

Quizplus · Accepted Answer

The duration gap is a measure used to assess the sensitivity of a financial institution's (FI's) net worth to changes in interest rates. It does not directly measure the impact on maturity gap strategy or liquidity strategy, although changes in interest rates can indirectly affect these areas.

The Duration Gap Can Be Used to Measure How Changes