Question

How do you explain the inverse relationship between NIM (Net Interest Margin) and interest rate movement in short-term using gap analysis?

Answer #1

There is an inverse relationship between interest rate
and money demand also there is an inverse relationship between
interest rate and bond prices too. Do these relationships hold when
interest rates are negative?
Thank you for your time.

Explain why there is an inverse relationship between the price
of bonds and the interest rate, or yield, on bonds. (Remember that
simply stating there is an inverse relationship is not the same as
explaining why the relationship is inverse). It might be best to
use an example here.

How would you describe the relationship between a bond's credit
rating and its interest rate?
Multiple Choice
Inverse relationship
Unrelated
Logarithmic
Direct relationship

⦁ Explain how Real GDP and interest rate have changed over time.
Explain the relationship between Real GDP and interest rate.

Present a thorough analysis of the inverse relationship between
inflation and unemployment reflected by the Phillips curve.
Describe the importance of expectations and how they affect the
actual relationship between the inflation rate and the unemployment
rate.

How do inflation and unemployment relate to the interest
rate?
What is the relationship between wage growth and
inflation?

There is ________ relationship between the real interest rate
and net capital outflows
A. no
B.
a positive
C.
a negative
D.
a constant
Which of the following is likely to decrease the federal funds
rate?
A.
A decrease in the quantity of required reserves
B.The sale of
longminus−term
bonds in open market operations
C.
An increase in the supply of bank reserves
D.
A decrease in the interest paid on reserves deposited at the
Fed

#16.1
The relationship between the size of the negative GDP gap and
the unemployment rate is
undefined.
direct.
direct during recession but inverse during expansion.
inverse.
#17.1
If the inflation premium is 3 percent and the real interest on a
loan is 4 percent, then the nominal interest rate is
−1 percent.
0.75 percent.
1 percent.
7 percent.

Explain the relationship between interest rates and exchange
rate

Consider a bank with the following data:
Interest sensitive assets = $250 million
Interest sensitive liabilities = $300 million
Calculate the IS-GAP, Relative IS-GAP and IS Ratio of the
firm
Comment on whether the bank has a positive or negative gap and
is asset or liability sensitive. Why?
What happens to the net interest margin (NIM) of this bank when
interest rates increase?
If the ALM team intentionally take this position, what do you
think their expectations are concerning the...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 3 minutes ago

asked 15 minutes ago

asked 26 minutes ago

asked 36 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago