Problem:
The following information details the rate sensitivity report for Gotbucks Bank, Inc. ($million).
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Maturity
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Overnight
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1-30 days
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31-91 days
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92-181 days
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Assets
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Fed Funds
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$20
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Loans
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$ 0
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$10
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$15
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$80
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Liabilities
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Fed Funds
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$50
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Euro CDs
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$ 5
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$25
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$40
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$ 0
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1. Calculate the funding gap for Gotbucks Bank using (a) a 30 day maturity period and (b) a 91 day maturity period? (Note: Each maturity period is cumulative.)
a. -$25 and +$80.
b. -$50 and -$75.
c. -$75 and +$5.
d. +$55 and -$40.
e. 0 and 0.
2. How will a decrease of 25 basis points in all interest rates affect Gotbuck's net interest income over a planning period of 91 days?
a. +$0.1875 million.
b. +$0.1250 million.
c. -$0.1375 million.
d. +$0.0625 million.
e. 0
Additional information:
This question is form Finance as well as it is about determining the funding gap with maturity periods and decrease in basis points in interest rates can affect bank's net interest income.