With a six-month maturity bucket,a nine-month fixed-rate loan would be considered a ________ asset and a 30-year mortgage with a rate adjustment in three months would be classified as a ________ asset.

Question

Quizplus · Accepted Answer

A six-month maturity bucket implies that the bank is sensitive to changes in interest rates over the next six months. Therefore, a nine-month fixed-rate loan (which will not be affected by interest rate changes for the next nine months) would be considered a fixed-rate asset as it does not fall within the six-month maturity bucket.

On the other hand, a 30-year mortgage with a rate adjustment in three months would be classified as a rate-sensitive asset. This is because the interest rate on the mortgage will be adjusted in three months and the bank's earnings from the asset will be affected by changes in interest rates.

With a Six-Month Maturity Bucket,a Nine-Month Fixed-Rate Loan Would Be