Which of the following is a weakness of the repricing model to measure interest rate risk?
A)Potential for over-aggregation of assets and liabilities within each maturity bucket.
B)It ignores how changes in interest rates affect the market value of assets and liabilities.
C)It ignores the reinvestment of loan interest and principal payments that are reinvested at current market rates and it fails to recognise off-balance-sheet activities that may be rate sensitive.
D)All of the listed options are correct.

Question

Quizplus · Accepted Answer

All of the listed options are correct. 
The repricing model has the potential for over-aggregating assets and liabilities within each maturity bucket, ignoring changes in the market value of assets and liabilities due to changes in interest rates, ignoring the reinvestment of loan interest and principal payments at current market rates, and failing to recognize off-balance-sheet activities that may be rate sensitive.

Which of the Following Is a Weakness of the Repricing