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XYZ continental bank has assets of $300 million half of which are sensitive to interest rate...

XYZ continental bank has assets of $300 million half of which are sensitive to interest rate fluctuations.

However, all its liability of $200 million are interest sensitive.

Calculate its Dollar IS Gap. Relative IS Gap, and IS Rato

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Answer #1

Interest sensitive assets = $300 million/2 = $150 million

Interest sensitive liabilities = $200 million

Dollar Interest sensitive gap = Interest sensitive assets - Interest sensitive liabilities = $150 million - $200 million = - $50 million

Relative Interest sensitive gap = Interest sensitive gap/Bank size = -$50 million/$300 million = - 16.67%

Interest sensitivity ratio = Interest sensitive assets/Interest sensitive liabilities = $150 million/$200 million = 0.75

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