Question

A bank has a negative repricing gap. This implies that Multiple Choice some RSAs are financed by fixed-rate liabilities. some RSLs are financing fixed-rate assets. some RSAs are financing equity. the bank has no fixed-rate assets. None of the options are correct.

Answer 1

Answer:

Some RSL's are financing fixed-rate assets.

Explanation:

Repricing gap is the difference between the sensitive interest rates charged by the banks on the loans given and sensitive interest rates payable by the banks on the deposits made by the customers or other liabilities.

A negative repricing gap is a situation where the interest  payable by the bank is more than the interest receivable by the bank.

RSL's means the rate sensitive liabilities that is the rate payable by the banks on the deposits or its other liabilities.

A bank can have a negative balance when a bank uses its rate of sensitive liabilities for financing the fixed assets for its use.