1) A bank could increase asset sensitivity if gap is negative by:

A)	decreasing its long-term securities as a percentage of total assets

B)	lengthening the average maturity of its loans

C)	replacing variable rate loans with fixed rate loans

D)	all of the above

E)	none of the above

2) A bank could reduce the magnitude of its negative gap (make it closer to zero) by:

A)	decreasing its long-term securities as a percentage of total assets

B)	decreasing its short-term deposit funding as a percentage of total assets

C)	using less short-term non-core purchased liabilities

D)	all of the above

E)	none of the above

3) Problems with GAP include which of the following?

A)	Gap assumes that rates on individual assets will move in unison with market interest rates

B)	Gap explicitly considers embedded options

C)	Gap addresses the actual time within a time period when interest-sensitive assets and liabilities will reprice

D)	Gap allows for non-parallel shifts in the yield curve

E)	all of the above

F)	none of the above

4) Examples of embedded options included in bank assets and liabilities include which of the following?

A)	preferred stock dividends

B)	call options on bonds

C)	common stock dividends

D)	retained earnings

E)	all of the above

F)	none of the above