One reason to exclude NOW accounts when estimating a bank's repricing gap is because the interest rates paid on these accounts typically do not change with the level of market rates.

Question

Quizplus · Accepted Answer

NOW accounts, or Negotiable Order of Withdrawal accounts, are a type of deposit account that typically offer a variable interest rate. However, unlike other variable rate deposit accounts, the interest rate on NOW accounts is often set by the bank and does not change with changes in market rates. As a result, NOW accounts can be excluded when estimating a bank's repricing gap, which measures the sensitivity of a bank's assets and liabilities to changes in interest rates.

One Reason to Exclude NOW Accounts When Estimating a Bank's