Defining buckets of time over a range of maturities assures the capture of all relevant information necessary to accurately assess the interest rate risk exposure of an FI.

Question

Quizplus · Accepted Answer

While defining buckets of time over a range of maturities helps in organizing and assessing interest rate risk, it does not assure the capture of all relevant information necessary for an accurate assessment. Other factors such as optionality, prepayment risks, and behavioral assumptions also play critical roles.

Defining Buckets of Time Over a Range of Maturities Assures