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Commercial Bankin Hw #3


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ASSIGNMENT COVER SHEET ASSIGNMENT COVER SHEET FLORIDA A & M UNIVERSITY SCHOOL OF BUSINESS & INDUSTRY Excellence with Caring FIN 4324-301 FIN 4324-301 Commercial Banking Administration Commercial Banking Administration Dr Michael M. Campbell Dr Michael M. Campbell Assignment Title: HW pg. 243 #1 and pg.281 #1 Student’s Name: Homework Group C Date: March 23, 2011 Assignment Grade: _______________ Spring 2011 Spring 2011
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Pg. 243 #1 What are the Major Sources of Interest Rate Risk according to the article entitled “Principles for the Management of Interest Rate Risk”? The article entitled “Principles for the Management of Interest Rate Risk” discusses in depth the effects of the interest rate risk. In order for the article to accurate is able to discuss these effects the author first identified the four major sources of interest rate risk. These four major sources are: Repricing Risk, Yield Curve Risk, Basis Risk, and Optionality. Repricing Risk: The article defines this as the “timing differences in the maturity rate (for fixed rate) and the repricing (the floating risk) of the bank assets, liabilities and off- balance sheet positions.” The article then describes how this is a fundamental principle in the
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