What is the difference between an Asset sensitive and a Liability sensitive firm?

ASSIGNMENT

Instructions:

• Read the question carefully and answer accordingly. Words 250

• Support your answer with sources, use APA style.

 Assignment Questions

 

1. Which act/s in the US Banking Sector supports the lifeline banking service?
2. Explain the different services that are covered under Lifeline Banking for low-income people.

 

1. What are the different non-deposit sources of funds for banks?
2. Explain the risks for the banks especially associated with non-deposit sources of funds.

 

1. What is the difference between real and nominal interest rates?
2. Explain the concept of Interest Rate Determination in the light of the Loanable Fund Theory.

 

1. What are financial derivatives?
2. Explain the process of a financial Put Option with the help of an example.

 

1. What is the difference between an Asset sensitive and a Liability sensitive firm?

If interest-sensitive assets (ISA) and interest-sensitive liabilities (ISL) of a financial firm are $125 million & $100 million respectively, what will be its interest-sensitive GAP (IS GAP)? Calculate the Relative IS GAP ratio for the same financial institution and comment, Is that firm Asset sensitive?