To be more precise in measuring interest rate risk, the runoff component of long-term mortgages should be considered in the time buckets in which the maturities actually occur.

Question

Quizplus · Accepted Answer

By considering the actual maturities of long-term mortgages in the time buckets, the measurement of interest rate risk becomes more accurate as it captures the impact of mortgage prepayments and early repayments on the bank's balance sheet.

To Be More Precise in Measuring Interest Rate Risk, the Runoff