A bank's GAP is defined as:
A) the dollar amount of rate-sensitive assets divided by the dollar amount of rate-sensitive liabilities.
B) the dollar amount of earning assets divided by the dollar amount of total liabilities.
C) the dollar amount of rate-sensitive assets minus the dollar amount of rate-sensitive liabilities.
D) the dollar amount of rate-sensitive liabilities minus the dollar amount of rate-sensitive assets.
E) the dollar amount of earning assets times the average liability interest rate.

Question

Quizplus · Accepted Answer

GAP is the difference between rate-sensitive assets and rate-sensitive liabilities. Therefore, the correct formula is the dollar amount of rate-sensitive assets minus the dollar amount of rate-sensitive liabilities.

A Bank's GAP Is Defined As