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Question
An FI finances a $250,000 2-year fixed-rate loan with a $200,000 1-year fixed-rate CD. Use the repricing model to determine (a) the FI's repricing (or funding) gap using a 1-year maturity bucket, and (b) the impact of a 100 basis point (0.01) decrease in interest rates on the FI's annual net interest income?
A. $0; $0.
B. -$200,000; +$2,000.
C. -$200,000; -$2,000.
D. +$50,000; -$500.
E. -$200,000; -$1,000.
Answer
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