If the currency mix of a bank's assets is similar to that of its liabilities and the overall rate sensitivity of its assets and liabilities is similar, interest rate risk is completely nonexistent.

Question

Quizplus · Accepted Answer

If the currency mix and rate sensitivity of a bank's assets and liabilities are similar, changes in interest rates will affect both sides of the balance sheet in a similar manner, resulting in no net impact on the bank's financial position.

If the Currency Mix of a Bank's Assets Is Similar