Which of the following statements is FALSE?A.The maturity bucket is the time window over which the dollar amounts of assets and liabilities are measured.B.If an FI wants to increase its repricing gap, it can replace its equity with demand deposits.C.If an FI wants to increase its repricing gap, it can replace fixed-rate loans with rate-sensitive loans.D.The repricing gap is a measure of the difference between the dollar value of assets that will reprice and the dollar value of liabilities that will reprice within a specific time periodE.According to the CGAP effect, when CGAP is positive the change in net interest income is positively related to the change in interest rates.

The repricing gap approach calculates the gaps in each maturity bucket by subtracting the A.current liabilities from tangible assets.B.rate-sensitive liabilities from the rate-sensitive assets.C.rate-sensitive assets from the total assets.D.long term liabilities from the fixed assets.E.current assets from the current liabilities.

Which of the following statements is TRUE?A.A positive repricing gap implies that a decrease in interest rates will cause interest expense to decrease more than the decrease in interest income. B.When the Reserve Bank finds it necessary to slow economic activity, it allows interest rates to fall. C.The repricing model estimates the difference between interest earned and interest paid during a given period of time. D.The repricing model is a simplistic approach to focusing on the exposure of net interest income to changes in market levels of interest rates for given maturity periods. E.If the average maturity of assets is 4 years and the average maturity of liabilities is 4 years, then the FI has no interest rate risk exposure.

The duration of an asset or a liability for which there are intervening cash flows between issue and maturityA.is smaller than the asset or the liability's maturityB.can be equal to or smaller than the asset or the liability's maturityC.equals the asset or the liability's maturityD.exceeds the asset or the liability's maturityE.can be equal to or greater than the asset or the liability's maturity

Which of the following statements is TRUE with regard to the following statement: Immunizing the balance sheet to protect equity holders from the effects of interest rate risk occurs when A.When the modified duration is equal to the dollar duration.B.the effect of a change in the level of interest rates on the value of the assets of the FI is exactly offset by the effect of the same change in interest rates on the liabilities of the FI.C.the maturity gap is zero, so that all assets have a matching-maturity liability.D.the modified duration gap of the balance sheet is zero.E.the repricing gap is zero, so that all assets have a matching liability that reprices at the same time.

Consider the following repricing buckets:Repricing Bucket  Assets Liabilities1 day $250,000 $300,0001 day to 3 months $150,000 $100,0003 to 6 months $300,000 $250,0006 to 12 months $500,000 $260,0001 to 5 years $150,000 $260,000Over 5 years $50,000 $200,000What is the change in the bank’s future net interest income if the average rate change for assets and liabilities that can be repriced within 6 months is an increase of 1%?Round your final answer to 2 decimal places.E.g. if the final  answer  is -$3,590 , type -3,590 in the answer box. If the final answer is $3,590 , type 3,590 in the  answer box (i.e do not type the dollar sign) .