A bank has a negative repricing gap. This implies that

Question

Quizplus · Accepted Answer

A negative repricing gap means that the bank has more fixed-rate liabilities (RSLs) than fixed-rate assets (RSAs). Option B correctly states that some RSLs are financing fixed-rate assets. Option A may also be true, but it is not the only implication of a negative repricing gap. Option C is incorrect as equity is not typically considered a funding source for RSAs. Option D is too extreme and may not be true in all cases. Therefore, the best answer is B.

A Bank Has a Negative Repricing Gap