A bank has $100 million in assets and 50 percent of its assets are interest sensitive. The bank has $75 million in liabilities, 50 percent of which are interest sensitive. What is the bank's gap between interest-sensitive assets and liabilities?
What will be an ideal response?
The amount of assets that are interest sensitive is 50 percent of $100 million or $50 million. The amount of liabilities that are interest sensitive is 50 percent of $75 million which is $37.5 million. Subtracting the interest-sensitive liabilities from the interest-sensitive assets leaves a gap of +$12.5 million.
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What will be an ideal response?
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