Get Started with ixamBee
Start learning 50% faster. Sign in now
Although ALM frameworks differ greatly among organizations, they typically involve the mitigation of a wide range is risks. Some of the most common risks addressed by ALM are interest rate risk and liquidity risk. Interest Rate Risk Interest rate risk refers to risks associated with changes to interest rates, and how changing interest rates affect future cash flows. Financial institutions typically hold assets and liabilities that are affected by changing interest rates. Two of the most common examples are deposits (assets) and loans (liabilities). As both are impacted by interest rates, an environment where rates are changing can result in a mismatching of assets and liabilities. Liquidity Risk Liquidity risk refers to risks associated with a financial institutionrsquo;s ability to facilitate itrsquo;s present and future cash-flow obligations, also known as liquidity. When the financial institution is unable to meet its obligations due to a shortage of liquidity, the risk is that it will adversely affect its financial position. To mitigate the liquidity risk, organizations may implement ALM procedures to increase liquidity to fulfill cash-flow obligations resulting from their liabilitiesOther Types of Risk Aside from interest and liquidity risks, other types of risks are also mitigated through ALM. One example is currency risk, which are risks associated with changes to exchange rates. When assets and liabilities are held in different currencies, a change in exchange rates can result in a mismatch. Another example is capital market risk, which are risks associated with changing equity prices. Such risks are often mitigated through futures, options, or derivatives.
If average of first 12 numbers is (n – 23) and the sum of remaining number is 925. Find the value of ‘n’, if the average of 22 numbers is ‘n’....
The average height of each student in a class of 15 students is 160 cm. If 6 new students joined the class, then the average height of the each student ...
The average age of a group of 20 students is 40 years. Two persons of age 44 years and 33 years, left the group and 2 persons of age 45 years and...
The average age of P, Q, and R is 22 years. Two years ago, the sum of the ages of P and Q was 5 years less than the age of R. Find the present age of R.
In an Aerobic class, the average age of all the members was 54.5 years, 11 members left the class and 7 new members joined. If the average age increased...
A chef prepared 6 different dishes, and the average rating for those dishes was 18 out of 100. For the next 4 dishes, the chef improved significantly, a...
The income of B is 85% of A and income of C is Rs 3600 more than that of B. The average income of all three together is Rs. 8400. A and B spend 50% of t...
The average of 19 numbers is 15.The average of first 9 numbers are12 and that of the last 9 numbers are15. What will be the 19th number?
The average weight of 8 boxes is 45 kg. If one more box weighing 63 kg is added, what will be the new average weight of the boxes?
The average mark obtained by 110 candidates in a certain examination is 45. If the average marks of passed candidates are 50 and that of the failed cand...
