Earnings Perspective versus Economic-Value Perspective

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Earnings Perspective versus Economic-Value Perspective - Article

This article explains the two complementary ways banks measure interest-rate risk: the Earnings Perspective and the Economic-Value Perspective. It covers NII sensitivity, Traditional Gap Analysis, Market Value of Equity, Duration Gap Analysis, repricing and duration effects, and practical balance-sheet situations, helping CAIIB BFM learners understand why short-term earnings and long-term economic value can react differently to the same rate movement.

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