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CAIIB ABM Module A & C By Ashish Sir Class 11
What is the primary objective of Asset Liability Management (ALM) in banks?
ALM aims to manage the risk arising from mismatches between assets and liabilities in terms of maturity, interest rate, and liquidity, thereby protecting the bank's net interest income and economic value.
What is the difference between Interest Rate Risk and Market Risk in banking?
Interest rate risk is a subset of market risk affecting banking book.
What does the Net Interest Margin (NIM) measure in a bank?
NIM measures the difference between interest income earned and interest paid out relative to earning assets, expressed as a percentage, and reflects the profitability of a bank's core lending activity.
What is the meaning of Yield to Maturity (YTM) for a bond?
YTM is the total return expected if bond is held until maturity.
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