The GAP ratio:
A) is always greater than one for bank's with a negative periodic GAP.
B) is equal to the volume of rate-sensitive liabilities times the volume of rate-sensitive assets.
C) is equal to the volume of rate-sensitive liabilities divided by the volume of rate-sensitive assets.
D) is equal to the volume of rate-sensitive assets divided by the volume of rate-sensitive liabilities.
E) is always less than one for bank's with a positive cumulative GAP.

Question

Quizplus · Accepted Answer

The GAP ratio is calculated by dividing the volume of rate-sensitive assets by the volume of rate-sensitive liabilities. This ratio helps in assessing the sensitivity of a bank's net interest income to changes in interest rates.

The GAP Ratio