Sources of interest rate risk for banks
Conclusion • Based on the quantity of interest rate risk and quality of interest rate risk management, we can evaluate the adequacy of the bank’s capital. • Determine the component rating for sensitivity to market risk. Brian Smith, CEO of Carter National Bank, decides that interest rates are going to fall in the future and as a result buys $100 million in 30 year Treasury Bonds for the bank's security portfolio. Instead, interest rates rise causing the value of these bonds to fall. This would be an example of which of the following types of risk? A