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Loan and Mortgage Terms Glossary

Asset/Liability Management:

A plan or program to control the difference (also known as spread or net interest margin) between the rate of interest or earnings received on assets and the rate of interest due on liabilities. In addition to selecting the mix of complimenting assets and liabilities, a key part of such a plan is timing the maturity of matched assets and liabilities. When they come due at the same time, assets can be reinvested and balancing liabilities can be repurchased at new interest rates that maintain the desired spread.

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