Assume that as part of the asset transformation process a bank takes in short term deposits with
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Assume that as part of the asset transformation process a bank takes in short term deposits with a maturity less than one year and “transforms” it into a 30 year mortgage loan to a customer. • Is this example considered to be short funded or long funded? • Would the bank be exposed to refinancing risk or reinvestment risk? • What movement in interest rates will negatively impact the bank?
Related Book For
Fundamental Accounting Principles Volume 1
ISBN: 9781259259807
15th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
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