Total one-year rate-sensitive assets is
A)$540 million.
B)$580 million.
C)$555 million.
D)$415 million.
E)$720 million.
[Reference: 8-84]

Question

Quizplus · Accepted Answer

Rate-sensitive assets are those assets that are likely to be affected by changes in interest rates. According to the information given in the question, the bank has $500 million in interest-bearing deposits, $90 million in short-term investments, and $15 million in long-term investments that mature within one year. Therefore, the total rate-sensitive assets are $500 million + $90 million + $15 million = $605 million. However, the bank has also stated that it has already hedged $50 million of its rate-sensitive assets, so the remaining one-year rate-sensitive assets are $605 million - $50 million = $555 million. Therefore, the correct answer is C) $555 million.

Total One-Year Rate-Sensitive Assets Is