Go to http:// minneapolisfed .org and search for interest rate risk and locate the article entitled Interest

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Go to http:// minneapolisfed .org and search for

“interest rate risk” and locate the article entitled

“Interest Rate Risk: What Is It, Why Banks Would Want It, and How to Evaluate It” from the July 2000 edition of the Fed Gazette. Answer the following questions based on your reading of this article.

Why is the Fed interested in interest rate risk

(IRR)? What do the authors mean when they say

“Think of IRR as blood pressure for banks”? Why do banks refuse to eliminate IRR? What happened to IRR in the commercial banking industry from 1998 to 1999? (Hint: Be careful in analyzing both the diagrams and their discussion.)

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Related Book For  book-img-for-question

An Introduction To Financial Markets And Institutions

ISBN: 978-0765622761

2nd Edition

Authors: Maureen Burton ,Reynold F. Nesiba ,Bruce Brown

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