Which of the Following Is a Weakness of the Repricing

question 114

Multiple Choice

Which of the following is a weakness of the repricing model to measure interest rate risk?

• A)Potential for overaggregation of assets and liabilities within each maturity bucket.
• B)It ignores how changes in interest rates affect the market value of assets and liabilities.
• C)It ignores the reinvestment of loan interest and principal payments that are reinvested at current market rates.
• D)It fails to recognize off-balance-sheet activities that may be rate-sensitive.
• E)All of the options.

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Definitions:

Debits

Accounting entries that increase assets or expenses and decrease liabilities, equity, or revenue.

Credits

Entries that increase liabilities, revenues, or equity, or decrease assets or expenses in accounting.

Transferring

The process of moving items, such as data, assets, or inventory, from one location or account to another.

Ledger Accounts

Individual records within the general ledger that show the transactions and balances for each accounting period, relating to specific assets, liabilities, equity, revenues, and expenses.