What is the repricing gap if a 1-year maturity gap is used if runoffs are also considered?
A)-22 million.
B)+$22 million.
C)+$53 million.
D)-$40 million.
E)-$70 million. [Refer to: 8-101]

Question

Quizplus · Accepted Answer

The repricing gap is the difference between the present value of the liabilities under the new interest rate and the present value of the assets under the new interest rate. In this case, the liabilities are the present value of the future cash flows from the insurance policies, and the assets are the present value of the future cash flows from the investments. The repricing gap is positive if the present value of the liabilities is greater than the present value of the assets, and negative if the present value of the assets is greater than the present value of the liabilities. In this case, the repricing gap is positive, which means that the present value of the liabilities is greater than the present value of the assets. The repricing gap is $53 million.

What Is the Repricing Gap If a 1-Year Maturity Gap