True or False: 1- Interest rate risk is solely a result of movement of market in

Question

True or False: 1- Interest rate risk is solely a result of movement of market interest 2- Credit unions are not for profit depository institutions, owned by their 3- The US federal reserve board is the primary body for coordinating 4- The separation of investment banking and commercial banking in the US was 5- The Dodd Frank Act solved the "Too Big to Fail" problem. rates customers. international regulation of large banks ended by the Financial Services Modernization Act__ 6- Credit VAR is a measure of an FI's daily exposure to losses resulting from adverse credit related events. The CAMELS rating system is used by US Banking regulators as a tool for monitoring the risk of failure of individual banks and savings and loan associations. 7- 8- Basel III expanded the ability of banks to use subordinated debt and 9- Leverage Capital Ratio standards are not needed for banks who use "risk 10-Deposit insurance systems create a strong incentive for governments to redeemable preferred stock as "core capital". based capital" management. regulate business practices of depository institutions

Explanation / Answer

1)

Market interest rate is considered as interest rate for many different bond valuations etc. If market interest rate increase, usually required rate will increase and vice-versa. Interest rate risk and market interest rates are directly related.

Hence, given statement is True.

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