What Is Spread Effect

question 61

Multiple Choice

What is spread effect?

• A)Periodic cash flow of interest and principal amortisation payments on long-term assets that can be reinvested at market rates.
• B)The effect that a change in the spread between rates on rate-sensitive assets and rate-sensitive liabilities has on net interest income as interest rates change.
• C)The effect of mismatch of asset and liabilities within a maturity bucket.
• D)The premium paid to compensate for the future uncertainty in a security's value.

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Definitions:

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Assuming something to be true without question or appreciation, often overlooking its value or importance.