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Question 30 (2.5 points) ) Listen Embedded options risk is: O A) risk that assets and liabilities take on new rates at different times B) risk associated with change in market rate differentials across various assets and liabilities C) risk associated with the change in interest rates across various maturities D) risk associated with customers' ability to alter the bank's cash flows via prepayments or withdrawals E) all of the above F) none of the above Question 31 (2.5 points) Listen If we are comparing the amount of rate sensitive assets versus rate sensitive liabilities during a specific time period, we are using which of the following interest rate risk measures? OA) GAP B) Earnings sensitivity analysis O C) Duration GAP OD) Economic value of equity sensitivity analysis E) None of the above Question 32 (2.5 points) Listen Embedded options risk refers to: O A) to potential that assets and liabilities will reprice at different times OB) the possibility that rates will change by different amounts for various assets and liabilities OC) the chance that rates may change by different amounts across maturities D) changes in rates that result in option exercise (for example, prepayments or early withdrawals) Question 33 (2.5 points) Listen A bank could increase asset sensitivity if gap is negative by: O A) decreasing its long-term securities as a percentage of total assets O B) shortening the average maturity of its loans OC) replacing fixed rate loans with variable rate loans D) all of the above E) none of the above Question 34 (2.5 points) ) Listen Asset liability management requires the bank's management to: A) Manage a bank's sensitivity to changes in market interest rates (interest rate risk) B) Plan, organize, and control asset and liability volume, mix, maturity, and rates OC) Achieve an acceptable risk of change in net interest margin or economic value of equity OD) all of the above E) none of the above

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