Consider the following information to answer the question: $$\begin{array} { | l | l | l | l | l | l | }
\hline \text { Assets } & \text { Amount } & \text { Rate } & \text { Liabilities } & \text { Amount } & \text { Rate } \
\hline \text { Rate } & \$ 35000000 & 10 \% & \text { Rate } & \$ 40000000 & 8 \% \
\hline \text { Sensitive } & & & \text { Sensitive } & & \
\hline \text { Fixed rate } & \$ 21000000 & 9 \% & \text { Fixed rate } & \$ 12000000 & 7 \% \
\hline \text { Non-earning } & \$ 4000000 & & \text { Equity } & \$ 8000000 & \
\hline
\end{array}$$ What is the repricing gap for the FI?
A)$0
B)$5,000,000
C)$9,800,000
D)-$5,000,000

Question

Consider the following information to answer the question: $$\begin{array} { | l | l | l | l | l | l | } 
\hline \text { Assets } & \text { Amount } & \text { Rate } & \text { Liabilities } & \text { Amount } & \text { Rate } \
\hline \text { Rate } & \$ 35000000 & 10 \% & \text { Rate } & \$ 40000000 & 8 \% \
\hline \text { Sensitive } & & & \text { Sensitive } & & \
\hline \text { Fixed rate } & \$ 21000000 & 9 \% & \text { Fixed rate } & \$ 12000000 & 7 \% \
\hline \text { Non-earning } & \$ 4000000 & & \text { Equity } & \$ 8000000 & \
\hline
\end{array}$$ What is the repricing gap for the FI?
A)$0
B)$5,000,000
C)$9,800,000
D)-$5,000,000

Quizplus · Accepted Answer

Repricing gap = Rate-sensitive assets - Rate-sensitive liabilities

For rate-sensitive assets:

Amount at 10% = $35,000,000

Amount at 9% = $21,000,000

Total rate-sensitive assets = $56,000,000

For rate-sensitive liabilities:

Amount at 8% = $40,000,000

Amount at 7% = $12,000,000

Total rate-sensitive liabilities = $52,000,000

Repricing gap = $56,000,000 - $52,000,000 = $4,000,000

However, since the liabilities have a higher rate than the assets, the repricing gap is negative, indicating that the FI has more rate-sensitive liabilities than assets.

Therefore, the answer is (D) -$5,000,000.

Consider the Following Information to Answer the Question What Is the Repricing Gap for the FI? A)$0 B)$5,000,000

Consider the Following Information to Answer the Question What Is the Repricing Gap for the FI?
A)$0
B)$5,000,000