When Considering Interest Rate Risk in the Banking Book, Retail

question 123

Multiple Choice

When considering interest rate risk in the banking book, retail demand deposits without fixed contractual maturity:

• A) should be assumed to have zero duration
• B) should be treated like other instantly variable rate liabilities, such as overnight money market borrowing.
• C) should be assumed to have a low correlation with money market reference rates
• D) represent a minor contributor to interest rate risk and can safely be disregarded

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Definitions:

Positive Reinforcement

A technique in behavior modification that involves rewarding a desired behavior to increase the likelihood of its occurrence.

Subordinate

An employee who reports to another employee higher in the organizational hierarchy, often tasked with carrying out specific jobs under supervision.

Staff Meeting

A regular gathering of employees led by management to discuss organizational issues, updates, and strategies.

Incentive Compensation Systems

Reward structures designed to motivate employees by tying a portion of their earnings to specific performance metrics.