The following information details the current rate sensitivity report for Gotbucks Bank, Inc. ($million). What does Gotbucks Bank's 91-day gap positions reveal about the bank management's interest rate forecasts and the bank's interest rate risk exposure?

Question

The following information details the current rate sensitivity report for Gotbucks Bank, Inc. ($million).  What does Gotbucks Bank's 91-day gap positions reveal about the bank management's interest rate forecasts and the bank's interest rate risk exposure?

Quizplus · Accepted Answer

The 91-day gap positions show that Gotbucks Bank has a negative gap, meaning they have more rate-sensitive liabilities than assets. This indicates that the bank is exposed to interest rate increases as their liabilities are likely to reprice faster than assets, resulting in a decrease in net interest income. However, the bank is positioned to gain when interest rates decline as their liabilities will reprice slower than assets, resulting in an increase in net interest income. Therefore, answer choice B is the best choice.

The Following Information Details the Current Rate Sensitivity Report for Gotbucks