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Question 1: (a) Asset liability management (ALM) represents the most important scope of interest rate risk management. Illustrate how asset-liability mismatches give rise to interest
Question 1: (a) Asset liability management (ALM) represents the most important scope of interest rate risk management. Illustrate how asset-liability mismatches give rise to interest rate risk thereby affecting both net interest income and net worth of the bank.
(b)Evaluate the following statement: All banks should target a zero dollar gap and duration gap.
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