The earnings at risk for an FI is a function of
A)the time necessary to liquidate assets.
B)the potential adverse move in yield.
C)the dollar market value of the position.
D)the price sensitivity of the position.
E)All of the options.

Question

Quizplus · Accepted Answer

The earnings at risk for an FI are influenced by all of the options listed. The time necessary to liquidate assets affects how quickly the FI can respond to changes in interest rates, while the potential adverse move in yield, the dollar market value of the position, and the price sensitivity of the position all have direct impacts on the level of risk an FI faces. Considering all of these factors together provides a more comprehensive measure of the potential risk to an FI's earnings.

The Earnings at Risk for an FI Is a Function