Editing Duration gap (section)

==Scope==
The outlined "static" approach considers any future gaps due to ''current'', i.e. existing, exposures, and any related [[Exercise (options)|exercise]] of ([[embedded option|embedded]]) options - usually [[Prepayment of loan|prepayments]] - at different points in time.
"Dynamic gap analysis" enlarges the scope by including "what if" scenarios, testing potential changes in business activity (new volumes, additional prepayment transactions, potential [[hedge (finance)|hedging transactions]]), and [[Fixed_income_analysis#Analysis|considering]] unusual interest rate scenarios, with their associated [[Yield_curve#Significance_of_slope_and_shape|shape of the yield curve]] and resultant [[Bond_valuation#Present_value_approach|changes in pricing]].
Depending on deal-stage and likelihood, [[Financial_analyst#Financial_planning_and_analysis |analysts]] will incorporate expected [[capital investment]]s and their [[Corporate_finance#Sources_of_capital|required funding]] under either approach, as appropriate.