The cumulative one-year repricing gap (CGAP) for the bank is
A)$25 million.
B)$-140 million.
C)$15 million.
D)$-150 million.
E)$-15 million.
[Reference: 8-84]

Question

Quizplus · Accepted Answer

To calculate the CGAP, we need to find the difference between the bank's assets and liabilities that will reprice within a year.

Cumulative one-year repricing gap (CGAP) = (Interest Sensitive Assets that will mature or reprice within a year) - (Interest Sensitive Liabilities that will mature or reprice within a year)

From the table given in question 8-84, the interest sensitive assets that will mature or reprice within a year are $165 million ($85m cash, $40m 1-year loan, $40m 2-year loan).

The interest sensitive liabilities that will mature or reprice within a year are $150 million ($50m demand deposits, $50m 1-year CDs, $50m 2-year CDs).

CGAP = $165m - $150m = $15 million.

Therefore, the correct answer is choice C, $15 million.

The Cumulative One-Year Repricing Gap (CGAP) for the Bank Is