Question

The assets and liabilities of Finacle Bank as on December 31, 2015, are as follows:$20,000 of short-term securities issued by governments and private borrowers (about to mature), $12,000 of borrowings from the money market, $15,000 of short-term savings accounts, $12,000 of variable-rate loans and securities, $18,000 of long-term loans made at a fixed interest rate, $25,000 of long-term savings and retirement accounts, $22,000 of deposits in the Central Bank (held as legal reserves), $550,000 of equity capital provided by the bank's owners, and $500,000 of building and equipment. what is the repriceable asset 32000?

Answer 1

The value of repriceable assets is determined as below:

Repriceable Assets = Short Term Securities Issues by the Government and Private Borrowers + Variable Rate Loans and Securities

Substituting values in the above formula, we get,

Repriceable Assets = 20,000 + 12,000 = $32,000 (answer)

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Notes:

1) Borrowings from money market and short-term savings accounts are treated as repriceable liabilities.

2) Long-term loans made at a fixed interest rate, deposits in the Central Bank (held as legal reserves) and building and equipment are treated as nonrepriceable assets.

3) Long-term savings and retirement accounts and equity capital provided by the bank's owners are treated as nonrepriceable liabilities.