Interest rate risk is one of the problems faced by most of the commercial banks.

1. (i)Define and explain the development of interest rate risk management.
2. (3 marks)
3. (ii)Discuss and explain the measurement model or technique that is used to measure the interest rate risk. (6 marks)
4. (iii)Select a financial statement of any financial institution for the year ended 2017 and 2018 from Bursa Malaysia (previously known as KLSE, Kuala Lumpur Stock Exchange) or Australian Securities Exchange and answer the following questions:
5. Basedonthefinancialreport,identifythebackgroundinformationofthe financial institution such as founder, principal activities and financial year ended etc. (3 marks)
6. Identify the items both under the uses and sources of fund of the financial institution. (3 marks)
7. Analyse the interest expense, interest income, net interest income.
8. (15 marks)
9. Explain what contributes to the changes in the net interest income of the financial institution. (9 marks)
10. (iv)Discuss TWO hedging techniques for interest rate risk encountered by financial institution. (6 marks)