Question
Which of the following is a type of interest rate
risk?Solution
Interest Rate Risk (IRR) refers to potential impact on NII or NIM or Market Value of Equity (MVE), caused by unexpected changes in market interest rates. The interest rate risks include: ·        Gap or mismatch risk ·        Basis risk ·        Embedded option risk ·        Yield curve risk ·        Price risk ·        Reinvestment risk Call risk, funding risk and time risk are types of liquidity risk.
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