Explain interest rate risk. Is your bank short-funded or long-funded? Explain why.

  1. CHAPTER 8 – Using the information from Question 1 and assuming your bank is planning for the 2-year or less maturity window(s), what is the cumulative repricing gap? Explain interest rate risk. Is your bank short-funded or long-funded?  Explain why.  To what type of type of interest rate risk is the bank exposed (reinvestment or refinance) in the 2-year or less maturity window(s)?  Explain why using the chart below.

 

 

 

 

  1. CHAPTER 8 – Using the information from Question 1 and “Total Assets” (“Total Assets”, not “Total Earning Assets” for the denominator) from Page 4 of your UPBR, what is the CGAP Ratio for the 2-year or less maturity window(s)? Interpret the result.

 

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