1. Why is the technique of asset liability management important for banks? Discuss ways to make ALM more effective for Banks. 2. Give three weakness of the re-pricing model. 3. Discuss the duration...

1. Why is the technique of asset liability management important for banks? Discuss ways to make ALM more effective for Banks. 2. Give three weakness of the re-pricing model.

3. Discuss the duration gap model and the difficulties in applying the duration gap model.

4. How does a bank determine its gap? Interpret a negative and a positive gap. Briefly discuss some limitations of measuring a bank’s gap.