A Bank with a Negative Repricing (Or Funding) Gap Faces

question 96

True/False

A bank with a negative repricing (or funding) gap faces reinvestment risk.

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Definitions:

Probability

The measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Standard Normal

A normal distribution with a mean of zero and a standard deviation of one, widely used in statistical analysis.

Random Variable

A variable whose numerical values stem from unpredictable phenomena.

Normally Distributed

Describes a probability distribution that is symmetric about the mean, showing that data near the mean are more frequent in occurrence than data far from the mean.