A bank has Federal funds totaling $25 million with an interest-rate sensitivity weight of 1.0.This bank also has loans of $105 million and investments of $65 million with interest rate sensitivity weights of 1.40 and 1.15 respectively.It also has $135 million in interest-bearing deposits with an interest rate sensitivity weight of 0.90 and other money market borrowings of $75 million with an interest rate sensitivity weight of 1.0.What is the weighted interest-sensitive gap for this bank?
A)$50.25 million
B)-$15.00 million
C)-$50.25 million
D)$34.25 million
E)$196.5 million

Question

Quizplus · Accepted Answer

The weighted interest-sensitive gap is calculated as follows:(Federal funds * Interest-rate sensitivity weight) + (Loans * Interest-rate sensitivity weight) + (Investments * Interest-rate sensitivity weight) - (Interest-bearing deposits * Interest-rate sensitivity weight) - (Other money market borrowings * Interest-rate sensitivity weight)= ($25 million * 1.0) + ($105 million * 1.40) + ($65 million * 1.15) - ($135 million * 0.90) - ($75 million * 1.0)= $25 million + $147 million + $74.75 million - $121.5 million - $75 million= $50.25 million

A Bank Has Federal Funds Totaling $25 Million with an Interest-Rate