Of the following institutions,which will be subject to reinvestment risk within a particular reprice bucket?
A)the market value of rate-sensitive liabilities is less than the market value of equity.
B)the book value of rate sensitive assets is greater than the book value of rate-sensitive liabilities.
C)the market value of rate-sensitive assets is less than the market value of rate-sensitive liabilities.
D)the book value of rate-sensitive liabilities is greater than the book value of rate-sensitive assets.

Question

Quizplus · Accepted Answer

Reinvestment risk occurs when the book value of rate-sensitive assets is greater than the book value of rate-sensitive liabilities, as the institution may have to reinvest the proceeds from maturing assets at lower interest rates.

Of the Following Institutions,which Will Be Subject to Reinvestment Risk