$$\begin{array} { | l | c | l | l | c | c | }
\hline & \text { Face Value } & \begin{array} { l }
\text { Runoff } \

Question

$$\begin{array} { | l | c | l | l | c | c | } 
\hline & \text { Face Value } & \begin{array} { l } 
\text { Runoff } \
< \mathbf { 1 } \text { year }
\end{array} & & \text { Face Value } & \begin{array} { c } 
\text { Runoff } \
< \mathbf { 1 } \text { year }
\end{array} \
\hline \text { 3-mo. T-Bills } & \$ 60 \mathrm {~m} & & \text { Demand Dep. } & \$ 180 \mathrm {~m} & 10 \text { percent } \
\hline \text { 2-yr Bonds } & \$ 60 \mathrm {~m} & 5 \text { percent } & \text { Equity } & \$ 20 \mathrm {~m} & \
\hline \text { 5-yr Bonds } & \$ 80 \mathrm {~m} & 10 \text { percent } & & & \
\hline
\end{array}$$
-What is the repricing gap if a 0 to 3 month maturity gap is used? Ignore runoffs.
A)$60 million.
B)$40 million.
C)-$80 million.
D)-$120 million.
E)-$180 million.

Quizplus · Accepted Answer

The repricing gap is the difference between the face value of the assets and the face value of the liabilities that mature within the maturity gap. In this case, the maturity gap is 0 to 3 months. The only asset that matures within this maturity gap is the 3-month T-Bills, which has a face value of $60 million. The only liability that matures within this maturity gap is the Demand Deposits, which has a face value of $180 million. Therefore, the repricing gap is $180 million - $60 million = $120 million.

-What Is the Repricing Gap If a 0 to 3