Using ChatGPT as a Teacher, as a Study Buddy - 24/7 by my side!

I have been trying to study for my exams the past few days. Sometimes I am full of energy, and some other times not. Whatever the case, I really need to study because my exam #1 is tomorrow and the second one in 4 days!

In this post I will be short but hopefully useful. I will share my idea and the way ChatGPT has helped me so far in what I am trying to achieve.

Have you ever tried to study and comprehend some difficult concepts but it just is not possible?

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That happened to me yesterday when I was trying to understand some specific meanings.

So then I thought; Why not giving an opportunity to ChatGPT to help me understand?

So I asked it to explain to me in a very simple way about it.

If you are wondering what I was trying to learn, I wanted to know the differences between maturity transformation & maturity matching

Both of these are used in finance/insurance terminology.

Simple Question

My question to ChatGPT

Can you simply explain the difference between maturity transformation and maturity matching?

Sure, I can explain the difference between maturity transformation and maturity matching in simple terms.

Maturity transformation is a strategy that financial institutions, such as banks, use to borrow money at short-term rates and lend it out at longer-term rates. This means that they take on the risk of interest rate changes, but potentially earn a higher return on their investments.

Maturity matching, on the other hand, is a strategy where financial institutions match the maturities of their assets and liabilities. This means that they try to have their short-term assets, such as deposits or short-term loans, match their short-term liabilities, such as loans that will be paid off soon or bonds that will mature soon. Similarly, they try to have their long-term assets, such as mortgages or long-term loans, match their long-term liabilities, such as bonds with longer maturities.

The goal of maturity matching is to minimize the risk of interest rate changes and ensure that the financial institution has sufficient cash to meet its obligations. This strategy can be less profitable than maturity transformation, but it can also be less risky.

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Let's transform the question a little bit and see what the response will be like

Create a prompt that starts by instructing ChatGPT acting as someone

Pretend you are a teacher and that a child asks you this question. Please try to explain in very simple terms. Explain the difference between maturity transformation and maturity matching?

The response was indeed much simpler, using simpler words so that it would be easier for the reader to understand.

Sure, I'd be happy to explain the difference between maturity transformation and maturity matching in simple terms!

Maturity transformation is when a bank takes in money from people who deposit it, and then lends that money out to other people for a longer period of time. The bank makes money by charging interest on the loans they give out, which is usually higher than the interest they pay to depositors. This means that the bank is taking on the risk that the people who borrow the money will pay it back on time, so they can pay back the depositors when they want to take their money out.

Maturity matching is when a bank tries to match the time frame of the loans it makes with the time frame of the deposits it takes in. So if someone deposits money in a bank for a year, the bank would try to make loans that are also for a year or less. This helps reduce the risk that the bank will be caught without enough money to pay back depositors if they all want to take their money out at the same time.

To summarize, maturity transformation is when a bank takes in short-term deposits and lends the money out for longer periods of time, while maturity matching is when a bank tries to make loans that match the time frame of the deposits it takes in. Both strategies have their benefits and risks, and banks use different combinations of the two to manage their business and meet the needs of their customers.

How different will the response be if it is asked to explain to a 5-year old?

Lastly, I asked it to explain to me like I am 5. And look at how it was written!

Sure, I'd be happy to explain the difference between maturity transformation and maturity matching in very simple terms!

Maturity transformation is when a bank takes money from people who put it in the bank, and then lends that money to other people for a long time. The bank makes money by charging interest on the loans they give out. This is like putting your toys in a toy box and then letting someone else borrow them for a while.

Maturity matching is when a bank tries to make sure that the time people put their money in the bank matches the time that the bank loans the money out to other people. This is like putting your toys in a toy box and then only letting someone borrow them for the same amount of time that you said they could.

Both ways help the bank make money and keep the money safe for the people who put it in the bank. Does that help you understand?

We can see the difference in the words and also in the way it responds to us. ChatGPT even sets an example so that it is best understood by a young person.

Takeaways

• You can use ChatGPT (or BingAI etc) so that you can understand difficult concepts or to assist with specific queries when you are studying.
• Use different forms of questions depending on how simple the answer should be.
• Make sure to check the validity of responses.
• If you are writing an assignment make sure NOT to use the exact quote by the chat. Anything written now is being checked so that could get you in trouble.
• I also tried to ask specific questions such as: Why is the risk greater when interest rates go up? And I got well-defined replies that actually helped a lot.

My question to you..

What is the strangest, funniest thing you have used ChatGPT for?
You can comment here or think about it and make a post about it!

Let me know & Thanks for reading!

p.s. Tomorrow I am writing my first online exam with closed books. It will be interesting to see how it goes.

Please send me good vibes!

WAGMI!

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