Consider the Following Repricing Buckets and Gaps What Is the Annualised Change in the Bank's Future Net

question 57

Multiple Choice

Consider the following repricing buckets and gaps: $$\begin{array} { | l | r | r | r | } \hline \text { Repricing bucket } & { \text { Assets } } & { \text { Liabilities } } & { \text { Gaps } } \\\hline \text { 1 day } & \$ 50000 & \$ 120000 & - \$ 70000 \\\hline \text { 1 day to 3 months } & \$ 100000 & \$ 70000 & \$ 30000 \\\hline \text { 3 to 6 months } & \$ 100000 & \$ 100000 & \$ 0 \\\hline \text { 6 to 12 months } & \$ 250000 & \$ 80000 & \$ 170000 \\\hline 1 \text { to 5 years } & \$ 75000 & \$ 130000 & - \$ 55000 \\\hline \text { Over 5 years } & \$ 25000 & \$ 100000 & - \$ 75000 \\\hline\end{array}$$ What is the annualised change in the bank's future net interest income if the overnight interest rate decreased by 100 basis points?

• A)-$700
• B)$700
• C)-$7000
• D)$7000

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Definitions:

Lancelets

Small marine animals belonging to the subphylum Cephalochordata, characterized by their fish-like shape and a notochord extending the length of their body.

Out-of-Africa Hypothesis

A theory suggesting that modern humans originated in Africa before dispersing to other parts of the world.

Homo Sapiens

The species name for modern humans, characterized by bipedalism and a large brain capacity relative to body size.

Replacement Model

Hypothesis of the evolution of modern humans from archaic species; also called the out-of-Africa hypothesis.