Interest Rate Risk in the Banking Book and Investment trust: Difference between pages

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''Bank supervision - capital adequacy.''
An investment trust is a limited liability company whose sole aim is to invest in securities issued by other entities.


(IRRBB).


IRRBB deals with the risks associated with a change in interest rates, and affecting a bank's banking book, as opposed to its trading book.
Investment trusts are similar to unit trusts.


However, unlike a unit trust, the number of shares that can be issued is limited (it is a closed-ended structure). 


IRRBB includes potentially adverse effects on earnings, capital, or both.


== See also ==
* [[Bid-offer spread]]
* [[Company]]
* [[Investment company]]
* [[Limited liability]]
* [[Net asset value]]
* [[Open-ended investment company]]
* [[Real estate investment trust]]  (REIT)
* [[Security]]
* [[Undertaking for collective investments in transferable securities]]
* [[Unit trust]]


Sources of IRRBB include interest rate gaps, basis risk, yield curve risk and option risk.
[[Category:Accounting,_tax_and_regulation]]
 
[[Category:The_business_context]]
 
[[Category:Corporate_finance]]
IRRBB is treated by most regulators as a Pillar 2 risk.
[[Category:Investment]]
 
[[Category:Long_term_funding]]
 
[[Category:Identify_and_assess_risks]]
== See also ==
[[Category:Manage_risks]]
* [[Banking book]]
[[Category:Risk_frameworks]]
* [[Basis risk]]
[[Category:Risk_reporting]]
* [[Capital adequacy]]
[[Category:Financial_products_and_markets]]
* [[EVE]]
* [[Interest rate risk]]
* [[Interest rate gap]]
* [[Market risk]]
* [[MCRMR]]
* [[MRBB]]
* [[NII]]
* [[Pillar 2]]
* [[Option risk]]
* [[Shock]]
* [[Trading book]]
* [[Yield curve risk]]

Revision as of 17:51, 11 February 2022

An investment trust is a limited liability company whose sole aim is to invest in securities issued by other entities.


Investment trusts are similar to unit trusts.

However, unlike a unit trust, the number of shares that can be issued is limited (it is a closed-ended structure).


See also