Question

Gaston Bank had interest revenues of $70 million last year and $30 million in interest expenses. About $300 million of Gaston's $800 million in assets are rate sensitive, while $600 million of its liabilities are rate sensitive. Gaston Bank's gap is $____.

Answer 1

Answer:

The gap amounts to $200 million

Explanation:

Computing the Gap of the Gaston bank using the formula as:

Gap = Rate Sensitive Asset - Rate Sensitive Liabilities

where

Rate Sensitive Asset amounts to $800 million

Rate Sensitive Liabilities amounts to $600 million

Putting the values above in order to compute the Gaston Bank Gap as:

Gap = $800 million - $600 million

Gap = $200 million

Therefore, the Gap of the Gaston bank amounts to $200 million