Which of the Following Is Not a Weakness of the Repricing

question 41

Multiple Choice

Which of the following is not a weakness of the repricing model to measure interest rate risk?

• A)Potential for over-aggregation of assets and liabilities within each maturity bucket.
• B)It ignores how changes in interest rates affect the market value of assets and liabilities.
• C)It ignores the reinvestment of loan interest and principal payments that are reinvested at current market rates and it fails to recognise off-balance-sheet activities that may be rate sensitive.
• D)It ignores how changes in currency exchange rates affect the market value of assets and liabilities.

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Definitions:

Cognitive Therapy

A type of psychotherapy aimed at changing negative patterns of thinking to improve mood and behavior.

Negative Interpretations

The cognitive bias or tendency to perceive situations or information in a detrimental or pessimistic way.

Client-centered Therapy

Client-centered therapy, developed by Carl Rogers, is a form of psychotherapy that emphasizes providing a supportive environment where clients can lead the way in their own process of healing or growth.

Cognitive-behavioral Therapy

A type of psychotherapy that addresses dysfunctional emotions, behaviors, and cognitions through a goal-oriented, systematic process.