Repricing gap refers to the:
A)difference between rate-sensitive assets and rate-sensitive liabilities
B)sum of rate-sensitive assets and rate-sensitive liabilities
C)difference between rate-sensitive liabilities and rate-sensitive assets
D)difference between rate-insensitive assets and rate-insensitive liabilities

Question

Quizplus · Accepted Answer

Repricing gap refers to the difference between rate-sensitive assets and rate-sensitive liabilities. This gap measures the sensitivity of a bank's net interest income to changes in interest rates. If a bank has more rate-sensitive assets than liabilities, a rise in interest rates will increase its net interest income, while a fall in rates will decrease it. On the other hand, if a bank has more rate-sensitive liabilities than assets, rising interest rates will decrease its net interest income, while falling rates will increase it.

Repricing Gap Refers to The