Use the data for City Bank to answer the following questions. Note that the Directors of City Bank have established the following policy guidelines for allowable interest rate risk:
Over a 1-year time frame, the ratio of rate sensitive assets to rate sensitive liabilities
should be between 0.85 and 1.15.
For a + 2% or -2% rate shock, economic value of equity should not fall by more than
- 1. According to GAP Analysis, what is the bank’s interest rate bet (risk exposure) over the next year? Cite specific data to support your answer.