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:

Holding Cost

The expenses associated with storing unsold goods or materials, including warehousing, insurance, and depreciation costs.

Order Cost

The total expense incurred in making and processing an order, including any procurement, delivery, and handling costs.

Holding Cost

The expenses associated with storing unsold goods or materials, including warehousing, insurance, and depreciation.

Manufacturing Cost

The total expense related to the production of goods, including raw materials, labor, and overhead costs.