$$\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 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.

Quizplus · Accepted Answer

The repricing gap is the difference between the face value of the assets that will mature in the next year and the face value of the liabilities that will mature in the next year. In this case, the face value of the assets that will mature in the next year is $60 million (3-mo. T-Bills) + $80 million (5-yr Bonds) = $140 million. The face value of the liabilities that will mature in the next year is $180 million (Demand Dep.) x 10% = $18 million. Therefore, the repricing gap is $140 million - $18 million = $122 million.

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