10 Questions
What is the purpose of establishing an Asset Liability Committee (ALCO) in financial institutions?
To oversee the management of interest rate risks
Why should financial institutions implement a Management Information System (MIS)?
To identify and manage interest rate risk
How does the interest rate risk strategy impact financial institutions?
Significantly on profitability and capital
Why is it essential for financial institutions to align their interest rate risk profile with business plans?
To ensure proper risk management
What should financial institutions do to maintain interest rate risk within prudent levels?
Have appropriate strategies, policies, and procedures in place
Which of the following statements is true about interest rate risk policies and procedures for financial institutions?
They should be clearly defined and consistent with the nature and complexity of activities.
In addition to interest rate risks, what else should an Asset Liability Committee (ALCO) oversee?
Financial institution's funding and balance sheet management
How can an appropriate Management Information System (MIS) benefit financial institutions?
By identifying, measuring, and monitoring interest rate risk effectively
Which of the following is not a function of an Asset Liability Committee (ALCO)?
Managing marketing campaigns
What type of risk should financial institutions aim to keep within prudent levels?
Interest rate risk
Discover key measures and indicators for managing liquidity risk in financial institutions during stressed conditions. Learn how to identify emerging risks and vulnerabilities in liquidity risk positions early on.
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