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3I0-012 · Question #187

3I0-012 Question #187: Real Exam Question with Answer & Explanation

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Question

When considering interest rate risk in the banking book, retail demand deposits without fixed contractual maturity:

Options

  • Ashould be assumed to have zero duration
  • Bshould be treated like other instantly variable rate liabilities, such as overnight money market borrowing.
  • Cshould be assumed to have a low correlation with money market reference rates
  • Drepresent a minor contributor to interest rate risk and can safely be disregarded

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