In: Finance
Which of the following describes the condition known as runoff in the repricing model approach to measuring interest rate risk of an FI?
Select one:
a. The effect that a change in the spread between rates on RSAs and RSLs has on net interest income as interest rates change.
b. Mismatch of asset and liabilities within a maturity bucket.
c. The relations between changes in interest rates and changes in net interest income.
d. Those deposits that act as an FI's long-term sources of funds.
e. Periodic cash flow of interest and principal amortization payments on long-term assets that can be reinvested at market rates.
The answer is option E, Periodic cash flow of interest and principal amortization payments on long-term assets that can be reinvested at market rates