# Calculate Net Interest Income Of Bank Based On Increase In Basis Points And Maturity Gap Repricing

Question

The following is the balance sheet of Boston Bank. The average maturity of demand deposits is estimated at 2 years.

 Face Value Runoff < 1 year Face Value Runoff < 1 year 3-mo. T-Bills \$60m Demand Dep. \$180m 10 percent 2-yr Bonds \$60m 5 percent Equity \$20m 5-yr Bonds \$80m 10 percent

1. What is the repricing gap if a 0 to 3 month maturity gap is used? Ignore runoffs.
a. \$60 million.
b. \$40 million.
c. –\$80 million.
d. –\$120 million.
e. –\$180 million.

2. What is the repricing gap if a 3-year maturity gap is used? Ignore runoffs.
a. \$21 million.
b. \$44 million.
c. –\$80 million.
d. –\$60 million.
e. –\$120 million.

3. What is the repricing gap if a 1-year maturity gap is used if runoffs are also considered?
a. –22 million.
b. +\$22 million.
c. +\$53 million.
d. –\$40 million.
e. –\$70 million.

4. What is the impact on net interest income in year two if interest rates increase by 50 basis points at the end of year one? Ignore runoffs.
a. +\$0.210 million.
b. +\$0.300 million.
c. –\$0.300 million.
d. –\$0.210 million.
e. +\$0.600 million.

Summary

This question belongs to Finance and it is about calculation of repricing maturity gap for 0-3 months, 3 years, 1 year and the impact on net interest income for the bank. These have been calculated in the solution in detail.

Total Word Count 173

• Rasha

this is a very good website

• maani

I have 50 questions for the same test your page is showing only 28

• joeanne

• joeanne

hi can anyone help or guide me to my assignments. thanks

• Monik

• Cristina

This solution is perfect ...thanks

• Janete

Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

• Sandeep

Perfect bank of solution.

• Oxana

great !

• Paul Brandon-Fritzius

thanks for the quick response. the solution looks good. :)

• tina Johnson

thnx for the answer. it was perfect. just the way i wanted it.

• Giuseppe

works fine.