Liability interest rate sensitivity than maturity

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Reference no: EM131507326

1. While recognizing that OBS ( Off- Balance –Sheet) instruments may add to the risk of an FI’s activities, explain how they also work to reduce the overall insolvency risk of FI’s

2. Other than hedging and speculation, what reasons do FI’s have for engaging in OBS activities?

3. What is the difference between VAR and ES?, and why ES is superior to VAR as a measure of market risk?

4. Why is duration considered a more complete measure of an asset’s or liability’s interest rate sensitivity than maturity?, and when is the duration of an asset equal to its maturity?

5. a- How can FIs change the size and the direction of their repricing gap?

b- Why is it useful to express the repricing gap in terms of a percentage of assets? What specific information does this provide?

Reference no: EM131507326

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