The gap ratio is useful because it indicates the scale of the interest rate exposure by dividing the gap by the asset size of the institution.

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The gap ratio, also known as the gap-to-assets ratio, is a common measure of interest rate risk exposure and is calculated by dividing the interest rate gap by the total assets of the institution. It is a useful metric as it provides a standardized way to compare the interest rate exposure of different institutions regardless of size.

The Gap Ratio Is Useful Because It Indicates the Scale