Assume you are the manager of an FI.How would you structure your balance sheet using the repricing gap model if you expected interest rates to increase?
A)I would create a positive gap.
B)I would create a negative gap.
C)I would create a neutral gap.
D)It would depend on my FI's current profitability.

Question

Quizplus · Accepted Answer

Creating a positive gap means that the assets will reprice or mature faster than liabilities. If interest rates increase, assets can be reinvested at higher rates sooner than liabilities increase in cost, potentially increasing net interest income.

Assume You Are the Manager of an FI