What is the difference between the incremental gap and the cumulative gap? Why is this distinction...
What is the difference between the incremental gap and the cumulative gap? Why is this distinction important?
Homework Answers
The incremental gap helps to measure the difference between rate sensitivity assets and rate-sensitive liabilities over increments of a given time horizon whereas the cumulative gap is the sum of the incremental gaps i.e measures over a more extended period.
It is vital to know the importance as both have different perspective towards calculation
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