When considering interest rate risk in the banking book, retail demand deposits without fixed contractual maturity:
A) should be assumed to have zero duration
B) should be treated like other instantly variable rate liabilities, such as overnight money market borrowing.
C) should be assumed to have a low correlation with money market reference rates
D) represent a minor contributor to interest rate risk and can safely be disregarded

Question

Quizplus · Accepted Answer

Retail demand deposits without fixed contractual maturity typically have a low correlation with money market reference rates, as they are often stable and not directly tied to market interest rate fluctuations.

When Considering Interest Rate Risk in the Banking Book, Retail