Question

QUESTION 7 Assume a bank has the following balance sheet. Determine the 2-year GAP. Asset Amount...

QUESTION 7
Assume a bank has the following balance sheet. Determine the 2-year GAP. Asset Amount Liability Amount Cash $100 90-day CDS $100 6-month $400 360-day CDs $200 Gbonds $400 Time Deposits $900 2-year 2-year commercial loans 5-year fixed rate loans Total $500 $200 Stockholder s equity Total $1,400 $1,400 GAP = (RSA, Yr – RSLZYP) 0 -$100 -$200 -$300 -$400

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

GAP(2-year) = RSA(2) - RSL(2)

GAP(2-year) = risk sensitive Assets with maturity less than 2 years - risk sensitive liabilities with maturity less than 2 years

=> GAP(2-year)= 6-month Gbond + 2-year commercial loans - 90-day CDs - 360-day CDs - Time deposits

=> GAP(2-year) = 400 + 400 - 100 - 200 - 900 = -$400

Please give thumbs up. It will help me.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Assume a bank has the following balance sheet for the 3-year GAP=$?   (Hint: only rate sensitive...
Assume a bank has the following balance sheet for the 3-year GAP=$?   (Hint: only rate sensitive assets and rate sensitive liabilities count) Asset Potential rate change Amount Liability Potential Rate change Amount Reserves at the Fed N/A $200 90-day CDs 0.85% $200 6-month T-Bills 2.00% $400 360-day CDs 1.00% $300 3-year Consumer loans 3.00% $600 Time Deposits 2- year 1.50% $1200 10-year mortgages 2.00% $800 Stockholder’ s equity N/A $200 Total $2000 Total $2000 -300 -400 -500 -600 -700 800
The bank balance sheet below lists the categories of assets and liabilities, along with the total...
The bank balance sheet below lists the categories of assets and liabilities, along with the total amount of each category, and the amount in each category that is "interest rate sensitive" or repriced within one year. Calculate the existing Dollar Gap for the bank. Next, calculate the effect (change) on this bank's Net Interest Income if interest rates fall or decrease by 1 percentage point or 100 bp. "%" denotes either the current interest rate earned earned or paid on...
What is the Duration Gap for the bank balance sheet shown below? Assets Amount Duration Liabilities...
What is the Duration Gap for the bank balance sheet shown below? Assets Amount Duration Liabilities and Equity Amount Duration Cash 80 0.00 Non-interest deposits 150 0.00 Securities 300 4.00 NOW checking 150 1.50 Loans, net 570 5.00 MMDA 300 0.25 Fed funds sold 0 CDs 170 2.00 Non-earning assets 50 Fed Funds purchased 150 0.00 $1,000 Equity 80 $1,000 A. 4.05 years B. 3.41 years C. 0.70 years D. 3.35 years E. 5.25 years
The bank balance sheet below lists the categories of assets and liabilities, along with the total...
The bank balance sheet below lists the categories of assets and liabilities, along with the total amount of each category, and the amount in each category that is "interest rate sensitive" or repriced within one year. Calculate the existing Dollar Gap for the bank. Next, calculate the effect (change) on this bank's Net Interest Income if interest rates fall or decrease by 0.50 percentage points or 50 bp. "%" denotes either the current interest rate earned earned or paid on...
A bank has the following balance sheet Assets                                  &nbs
A bank has the following balance sheet Assets                                      Liabilities                            Reserves          $100 million      Deposits      $450 million Loans              $500 million      Capital        $150 million a). How much does this bank maintain in terms of reserve ratio? (Hint: the reserve ratio is NOT 10%. It is just an example discussed in the slides and in the book. You need to calculate the reserve ratio maintained by this bank). b). Suppose the bank has an increase in deposit inflows in the amount of $50 million. It chooses not to make any additional...
Assume that a bank has on its asset side reserves of 500 and loans of 3000...
Assume that a bank has on its asset side reserves of 500 and loans of 3000 and on its liability side deposits of 3500. Assume that the required reserve ratio is 10 percent. (a) How much is the bank required to hold as reserves given its deposits of 3500? (b) How much are its excess reserves? (c) By how much can the bank increase its loans? (d) Suppose a depositor comes to the bank and withdraws 400 in cash. Show...
Question 3 The Balance Sheet of Hedge Row Bancorp (In Millions) is provided below. Asset Amount...
Question 3 The Balance Sheet of Hedge Row Bancorp (In Millions) is provided below. Asset Amount Liability & Equity Amount Cash (Non-Interest Earning) 10.0 Demand Deposit (One-Year Maturity) 70 Short Term Consumer Loan (One-year Maturity) 140 Demand Deposit (Two-year Maturity) 40 Long Term Consumer Loan (Two-Year Maturity) 150 Three-Month Certificate of Deposits (CDs) 140 Three-Month Treasury Bills 145 Three-Month Bankers Acceptances 100 Six-Month Treasury Notes 110 Six-Months Commercial Paper 155 Five-year Treasury Bond 85 One-Year Time Deposit 195 10 Year,...
Draw a balance sheet for New Bank, which started its first day of operations with $6...
Draw a balance sheet for New Bank, which started its first day of operations with $6 million in capital. A total of $100 million in checkable deposits is received. The bank makes a $25 million commercial loan and lends another $25 million in mortgage loans. Required reserves are 8%.
Consider that there is only one bank and its balance sheet is as follows Use it...
Consider that there is only one bank and its balance sheet is as follows Use it to answer the next 3 questions. Assets Liabilities Reserves $60 Demand Deposits $500 Loans $440 Let rrD = 10% 99. This bank currently has _____ in excess reserves. a. $0 b. $5 c. $10 d. $50 e. $450 100. If $100 in demand deposits were withdrawn as cash, what would be the bank’s level of undesired excess reserves? a. negative $30 b. negative $50...
Use the following balance sheet information for Metro Bank (MB) for the next three questions: Assets...
Use the following balance sheet information for Metro Bank (MB) for the next three questions: Assets $ in million RSF % Liability and equity $ in million ASF cash 400 0% deposits 2,700 70% loans 3,000 75% borrowings 800 30% securities 600 25% equity 500 100% total 4,000 total 4000 What is the amount of available stable funding of MB? $2,200m $2,400m $2,550m $2,630m $2,750m What is the amount of required stable funding of MB? $2,200m $2,400m $2,550m $2,630m $2,750m...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT