Interest rate risk Example: $10,000 Car loan 4 year Car loan at 8.5% 1 year CD at 4.56 Spread 4.0% But for How long? Funding GAP GAP $RSA-$RSL, where $RSA =amount of assets which will mature or reprice in a give period of time. In this example: GAP1y=$0.00-$10,000=-$10,000 This is a negative GAP. 行贺影小号Interest rate risk Interest rate risk Example: $10,000 Car loan 4 year Car loan at 8.5% 1 year CD at 4.5% Spread 4.0% But for How long? Funding GAP GAP = $RSA - $RSL, where $RSA = $ amount of assets which will mature or reprice in a give period of time. In this example: GAP1y = $0.00 - $10,000 = - $10,000 This is a negative GAP