8-35 Because of its simplicity,smaller depository institutions still use this model as their primary measure of interest rate risk.
A)The repricing model.
B)The maturity model.
C)The duration model.
D)The convexity model.
E)The option pricing model.

Question

Quizplus · Accepted Answer

The repricing model is the simplest and most straightforward model for measuring interest rate risk. It focuses on the timing and amount of assets and liabilities that are scheduled to reprice or mature within a specific time frame. This model is commonly used by smaller depository institutions because it is easy to understand, implement, and monitor. It does not require sophisticated statistical analysis or complex calculations, which makes it an affordable option for institutions with limited resources.

8-35 Because of Its Simplicity,smaller Depository Institutions Still Use This