A bank whose interest-sensitive assets total $350 million and its interest-sensitive liabilities amount to $175 million has:
A)an asset-sensitive gap of $525 million.
B)a liability-sensitive gap of $175 million.
C)an asset-sensitive gap of $175 million.
D)a liability-sensitive gap of $350 million.
E)None of the options is correct.

Question

Quizplus · Accepted Answer

Gap = interest-sensitive assets - interest-sensitive liabilities
Gap = $350 million - $175 million
Gap = $175 million

Since the interest-sensitive assets are greater than the interest-sensitive liabilities, the bank has an asset-sensitive gap.

A Bank Whose Interest-Sensitive Assets Total $350 Million and Its