The larger the size of an FI, the larger the _________ from any given interest rate shock.
A)duration mismatch
B)immunisation effect
C)net worth exposure
D)net interest income

Question

Quizplus · Accepted Answer

Larger FIs have a higher net worth exposure to any given interest rate shock as they have a larger portfolio of assets and liabilities. This means that the market value of their assets and liabilities will be affected to a greater extent by changes in interest rates, impacting their net worth.

The Larger the Size of an FI, the Larger the _________