8-68 Use the repricing model to determine the funding gap for a maturity bucket of 30 days.
A)-$425 million.
B)-$95 million.
C)-$10 million.
D)-$475 million.
E)+$150 million.

Question

Quizplus · Accepted Answer

The repricing model calculates the funding gap by subtracting the amount of rate-sensitive liabilities from the amount of rate-sensitive assets. If the rate-sensitive assets exceed the rate-sensitive liabilities, it results in a positive funding gap, indicating that the institution has more funds available for investment. Conversely, a negative funding gap occurs when the rate-sensitive liabilities exceed the rate-sensitive assets, indicating a potential funding shortfall.

Given the options, only option A specifies a negative funding gap, which means the rate-sensitive liabilities exceed the rate-sensitive assets by $425 million. Therefore, option A is the correct answer.

8-68 Use the Repricing Model to Determine the Funding Gap