Which of the Following Describes the Condition Known as Runoff

question 29

Multiple Choice

Which of the following describes the condition known as runoff in the repricing model approach to measuring interest rate risk of an FI?

• A)Periodic cash flow of interest and principal amortization payments on long-term assets that can be reinvested at market rates.
• B)The effect that a change in the spread between rates on RSAs and RSLs has on net interest income as interest rates change.
• C)Mismatch of asset and liabilities within a maturity bucket.
• D)The relations between changes in interest rates and changes in net interest income.
• E)Those deposits that act as an FI's long-term sources of funds.

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Definitions:

In-Kind Transfers

Transfers of goods or services from one party to another as a form of payment or aid, rather than transferring cash.

Economic Pie

A metaphorical representation of a nation's total economic output, suggesting how much wealth is available for distribution among its population.

Same Income

A situation where two or more individuals or entities earn an identical amount of money over a given period.

Poverty Threshold

The minimum income level deemed necessary to achieve an adequate standard of living in a given country or region.