ISGM does not consider the impact of the changes in the interest rates on the following:...

ISGM does not consider the impact of the changes in the interest rates on the following:

Select one:

a. NIM

b. NII

c. Net worth

Solutions

Expert Solution

Answer-

The correct option is c. Net worth

ISGM does not consider the impact of changes in interest rates on Net worth.

The Net Interest Income (NII) and Net Interest Margin (NIM) of banks are dependent on the movements of interest rates. Any mismatches in the cash flows ie. fixed assets or liabilities or repricing dates in case of floating assets or liabilities, will expose the bank’s NII or NIM and both will vary with changes in interest rates.

jeff jeffy answered 2 years ago

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