The Repricing Gap Does Not Accurately Measure FI Interest Rate

question 111

Multiple Choice

The repricing gap does not accurately measure FI interest rate risk exposure because

• A)FIs cannot accurately predict the magnitude change in future interest rates.
• B)FIs cannot accurately predict the direction of change in future interest rates.
• C)accounting systems are not accurate enough to allow the calculation of precise gap measures.
• D)it does not recognize timing differences in cash flows within the same maturity grouping.
• E)equity is omitted.

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Definitions:

Threating Messages

Written or verbal communications intended to frighten or coerce someone by promising harm or punishment.

First Amendment

The amendment to the United States Constitution that guarantees freedoms concerning religion, expression, assembly, and the right to petition.

Supremacy Clause

A provision in the U.S. Constitution stating that federal law takes precedence over state laws and constitutions when they are in conflict.

Gas Pipeline

A specialized conduit designed to transport natural gas from its source to its point of use.