What does exposure falls within established tolerances mean

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Reference no: EM132063125

Understanding Interest rates and derivatives

1) What does "exposure falls within the established tolerances" mean? What is exposure? What is established tolerance?

"Alliance uses economic value sensitivity analysis and re-pricing gap analysis to evaluate potential long-term effects of changes in interest rates. It then enters into interest rate swaps to convert portions of its floating-rate debt to fixed or its fixed-rate debt to floating to ensure that Alliance's exposure falls within the established tolerances."

Reference no: EM132063125

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