CAIIB ABM Module A & C By Ashish Sir Class 2
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Advanced Bank Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
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.
How is the 'Duration Gap' used in interest rate risk management?
Duration Gap measures the difference between the weighted average duration of assets and liabilities; a positive gap indicates the bank is exposed to falling interest rates, while a negative gap signals risk from rising rates.
What is 'Negative Gap' in the context of bank balance sheet management?
Liabilities reprice faster than assets, increasing cost of funds.
What is the significance of the 'Repricing Gap' in ALM?
Repricing Gap measures the difference between rate-sensitive assets and rate-sensitive liabilities within a given time bucket, helping banks assess exposure to interest rate changes.
What is 'Funding Liquidity Risk' in a bank's treasury operations?
Risk that a bank cannot meet its short-term financial obligations.
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