An FI with a positive gap of $30 million suffers a $0.15 million decrease in its net interest income if interest rates increase by 0.5 per cent.

Name: An FI with a positive gap of $30 million suffers a $0.15 million decrease in its net interest income if interest rates increase by 0.5 per cent.
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Question

Quizplus · Accepted Answer

A positive gap means that the FI has more rate-sensitive assets than liabilities. If interest rates increase, the net interest income should increase, not decrease.

An FI with a Positive Gap of $30 Million Suffers