Repricing Opportunity

A repricing opportunity is a change in the market environment that allows for a reassessment of the value of an investment. This can happen with stocks, bonds or other types of investments.

Specifically dealing with interest rates and their effects on the market: a repricing opportunity can be defined as the change in the interest rate of an interest-sensitive asset or liability. Banks earn income from interest, so their income fluctuates with changes in interest rates. A bank can minimize its interest-rate risk and maximize its net interest income by minimizing the differences in repricing opportunities between its assets, such as adjustable-rate mortgages, and its liabilities, such as the rate of interest it pays on customer deposits or certificates of deposit.

Events which create repricing opportunities can be specific to a particular company, or be sweeping changes that affect multiple investments in the marketplace.

Relating to interest rates and banks: depending on the mix of assets and liabilities the bank's portfolio holds, repricing opportunities can make a bank either asset-sensitive or liability-sensitive. Banks also experience other types of risk, including foreign currency exchange rate risk, commodity price risk and trading investment portfolio risk.