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Calculation of Net Interest Income Of Bank On Decrease in Basis Points

Question

The following information details the rate sensitivity report for Gotbucks Bank, Inc. ($million).

 

 

Maturity

 

 

Overnight

1-30 days

31-91 days

92-181 days

Assets

Fed Funds

$20

 

 

 

 

Loans

$ 0

$10

$15

$80

Liabilities

 

 

 

 

 

 

Fed Funds

$50

 

 

 

 

Euro CDs

$ 5

$25

$40

$ 0


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

Summary

This question belongs to Finance and it is about calculating the funding gap with maturity periods and decrease in basis points in interest rates can affect the bank’s net interest income.

Total Word Count 140

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