CAIIB Paper 2: Bank Financial Management (BFM)

Q: In Asset-Liability Management (ALM), a bank has a "Positive Interest Rate Sensitivity Gap" when:

Correct Answer: Option A (Rate-Sensitive Assets (RSA) exceed Rate-Sensitive Liabilities (RSL)). A Positive Gap occurs when RSA > RSL. In this scenario, when market interest rates rise, Net Interest Income (NII) increases because more assets re-price at higher rates compared to liabilities.

1 Questions (Mod D) 4 Modules

Practice CAIIB Paper 2: Bank Financial Management (BFM) - Module D (Balance Sheet Management) multiple choice questions with detailed step-by-step explanations.

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