Interest-sensitive gap and weighted interest-sensitive gap will always reach the same conclusion as to whether a bank is asset sensitive or liability sensitive.

Question

Quizplus · Accepted Answer

Interest-sensitive gap and weighted interest-sensitive gap may produce different results in determining whether a bank is asset sensitive or liability sensitive. Weighted interest-sensitive gap takes into account the size of the interest rate-sensitive assets and liabilities, while interest-sensitive gap only considers the absolute amounts. Therefore, a bank may have a positive interest-sensitive gap but a negative weighted interest-sensitive gap, or vice versa.

Interest-Sensitive Gap and Weighted Interest-Sensitive Gap Will Always Reach the Same