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Forums › ACCA Forums › ACCA FM Financial Management Forums › negative gap
a negative gap occurs when interest sensitive liabilities maturing at a certain time are greater than interest sensitive assets maturing at the same time . this result in a net exposure if interest rate rise by the time of maturity please explain this i dont understand this
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The interest charged on money we owe is always higher than the interest received on deposits.
So if interest rates rise, then the interest payable on the liabilities will be more than the interest receivable on the assets.