Which of the following is a measure for banks to assess their exposure to interest rate risk?

Question

Quizplus · Accepted Answer

Capital ratio and leverage measure are important measures of a bank's financial strength, but they do not necessarily provide information about the bank's exposure to interest rate risk. Duration measurement and gap ratio are specific measures that banks use to assess interest rate risk. Duration measurement assesses the sensitivity of a bank's assets and liabilities to changes in interest rates, while gap ratio measures the difference between a bank's interest-sensitive assets and liabilities. Therefore, the best choice is E, as both C and D are measures that banks use to assess their exposure to interest rate risk.

Which of the Following Is a Measure for Banks to Assess