Use the repricing model to determine the funding gap for a maturity bucket of 365 days.
A)+$15 million.
B)-$20 million.
C)-$350 million.
D)-$450 million.
E)-$290 million. [Refer to: 8-89]

Question

Quizplus · Accepted Answer

The repricing model calculates the funding gap by subtracting the rate-sensitive assets (RSA) from the rate-sensitive liabilities (RSL). In this case, the RSA is $450 million, which is the amount of assets that will reprice within the 365-day maturity bucket. The RSL is $100 million in deposits that will reprice within the same period. Therefore, the funding gap is -$350 million ($100 million - $450 million), indicating that the bank has more liabilities that will reprice than assets, which could lead to a potential funding shortfall.

Use the Repricing Model to Determine the Funding Gap for a Maturity