It's just an adjustment to account for the difference (equity) between A and L. In some calculations, it is ignored because it's often not so large for many banks.
Can you please explain what is the meaning of "repricing" of financial assets and financial liabilities? Could you give an example? I know this question is not related to this video but would be happy if you could help. Thanks
How do value of RSA and RSL decrease with an increase in interest rates? Won't the rise in interest rates lead to more inflow in form of deposits? And also the effective income from the assets would increase? Please help.
In my earlier videos in this series, I showed the effect of interest rate changes on income. The current example is showing the impact on the VALUE of assets and liabilities.
Thank you for your video. This video helps me and a ton of my friends a lot.
I love u. I understand it in 9 min than my teacher 2 hr lecture 😌
Thank you so much Sir. Well explained.... Salute
Thank you, you saved me!
You're welcome :-)
Hi this is very useful, thanks! Why do we need 'u' (i.e.L/A) factor in the duration calculation please?
It's just an adjustment to account for the difference (equity) between A and L. In some calculations, it is ignored because it's often not so large for many banks.
Can you please explain what is the meaning of "repricing" of financial assets and financial liabilities? Could you give an example? I know this question is not related to this video but would be happy if you could help. Thanks
Refers to the determination of the MARKET VALUE of an asset (loans in this case) with the intent, perhaps, to sell it to another bank.
How do value of RSA and RSL decrease with an increase in interest rates? Won't the rise in interest rates lead to more inflow in form of deposits? And also the effective income from the assets would increase? Please help.
In my earlier videos in this series, I showed the effect of interest rate changes on income. The current example is showing the impact on the VALUE of assets and liabilities.
Hey mate
How much would we need to change to get DGAP equal to zero and how do you work out that? great video btw
You may have to do a "what-if" on spreadsheet or solve the derivative :-).
@@PatObi Thanks for help mate.