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      Question

      Duration Gap Analysis is a crucial technique extensively

      utilized by banks to identify, measure, and mitigate their exposure to which of the following specific risks arising from discrepancies in the maturity of assets and liabilities?
      A Credit Risk Correct Answer Incorrect Answer
      B Liquidity Risk Correct Answer Incorrect Answer
      C Operational Risk Correct Answer Incorrect Answer
      D Interest Rate Risk Correct Answer Incorrect Answer
      E Foreign Exchange Risk Correct Answer Incorrect Answer

      Solution

      Duration Gap Analysis compares the durations of assets and liabilities to assess sensitivity to interest rate changes. A mismatch can lead to interest rate risk, affecting a bank’s net worth.

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