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CAIIB ABM Module A & C By Ashish Sir Class 2
What is the primary objective of Asset Liability Management (ALM) in a bank?
ALM aims to manage the risk arising from mismatches between assets and liabilities in terms of maturity, interest rate, and currency, ensuring liquidity and profitability are balanced.
What is the primary function of the 'Gap Report' in Asset Liability Management?
It shows mismatches between rate-sensitive assets and liabilities.
What does the term 'Net Interest Margin (NIM)' represent in banking?
NIM is the difference between interest income earned on assets and interest paid on liabilities, expressed as a percentage of average earning assets, reflecting the bank's core profitability.
What does 'Positive Gap' indicate in interest rate risk management?
Assets reprice faster than liabilities in rising rate environments.
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