Which of the following statements is true?
A)One problem with the repricing gap is over-aggregation, which means that while the dollar value of asset-sensitive liabilities and assets within one bucket might be the same, the repricing timing for assets and liabilities within this bucket might differ.
B)One problem with the repricing gap is over-aggregation, which means that managers cannot make informed decisions about interest rate movements.
C)An advantage of the repricing gap is over-aggregation, which means that the information provided in the buckets is precise.
D)None of the listed options are correct.

Question

Quizplus · Accepted Answer

The statement in option A is true. The over-aggregation in the repricing gap means that the dollar value of asset-sensitive liabilities and assets within one bucket might be the same, but the timing of the repricing of assets and liabilities within the same bucket might differ. This can create problems for managers who use the information provided in the buckets to make decisions about interest rate movements. Option B is incorrect because over-aggregation creates problems for managers rather than limiting their ability to make informed decisions. Option C is incorrect because over-aggregation reduces the precision of the information provided in the buckets. Option D is incorrect because option A is true.

Which of the Following Statements Is True