The following are the assets and liabilities of a government security dealer. $$\begin{array} { | l | l | }
\hline \text { Assets: } & \text { \$150 million } 30 \text { day Treasury bills } \
\hline & \text { \$275 million } 91 \text { day Treasury bills } \
\hline & \text { \$90 million } 180 \text { day municipal notes } \
\hline & \$ 350 \text { million } 2 \text { year Treasury notes } \
\hline & \
\hline \text { Liabilities: } & \text { \$575 million } 14 \text { day repurchase agreements } \
\hline & \$ 290 \text { million } 1 \text { year commercial paper } \
\hline
\end{array}$$
-Use the repricing model to determine the funding gap for a maturity bucket of 30 days.
A)-$425 million.
B)-$95 million.
C)-$10 million.
D)-$475 million.
E)+$150 million.

Question

The following are the assets and liabilities of a government security dealer. $$\begin{array} { | l | l | } 
\hline \text { Assets: } & \text { \$150 million } 30 \text { day Treasury bills } \
\hline & \text { \$275 million } 91 \text { day Treasury bills } \
\hline & \text { \$90 million } 180 \text { day municipal notes } \
\hline & \$ 350 \text { million } 2 \text { year Treasury notes } \
\hline & \
\hline \text { Liabilities: } & \text { \$575 million } 14 \text { day repurchase agreements } \
\hline & \$ 290 \text { million } 1 \text { year commercial paper } \
\hline
\end{array}$$
-Use the repricing model to determine the funding gap for a maturity bucket of 30 days.
A)-$425 million.
B)-$95 million.
C)-$10 million.
D)-$475 million.
E)+$150 million.

Quizplus · Accepted Answer

The funding gap for a 30-day maturity bucket is calculated by subtracting the liabilities maturing within 30 days from the assets maturing within the same period. Assets maturing within 30 days are $150 million (30-day Treasury bills). Liabilities maturing within 30 days are $575 million (14-day repurchase agreements). The funding gap is $150 million - $575 million = -$425 million.

The Following Are the Assets and Liabilities of a Government