A gap ratio of less than 1.00 suggests that
A)rate-sensitive assets exceed rate-sensitive liabilities.
B)an increase in interest rates would increase the bank's net interest margin.
C)rate-sensitive liabilities exceed rate-sensitive assets.
D)a decrease in interest rates would decrease the bank's net interest margin.
E)an increase in interest rates would increase the bank's net interest margin AND a decrease in interest rates would decrease the bank's net interest margin.

Question

Quizplus · Accepted Answer

A gap ratio of less than 1.00 indicates that rate-sensitive liabilities exceed rate-sensitive assets, which means the bank is more vulnerable to increases in interest rates.

A Gap Ratio of Less Than 1