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Which of the following describes the condition known as runoff in the repricing model approach to measuring interest rate risk of an FI? Select one: a

Finance Sep 08, 2020

Which of the following describes the condition known as runoff in the repricing model approach to measuring interest rate risk of an FI?

Select one:

a. The effect that a change in the spread between rates on RSAs and RSLs has on net interest income as interest rates change.

b. Mismatch of asset and liabilities within a maturity bucket.

c. The relations between changes in interest rates and changes in net interest income.

d. Those deposits that act as an FI's long-term sources of funds.

e. Periodic cash flow of interest and principal amortization payments on long-term assets that can be reinvested at market rates.

Expert Solution

The answer is option E, Periodic cash flow of interest and principal amortization payments on long-term assets that can be reinvested at market rates

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