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Question
A thrift has an annual CGAP of -$25 million. A credit union has an annual CGAP of +$5 million. The thrift has total assets of $500 million and net income of $7.5 million and the credit union has total assets of $40 million and net income of $0.7 million.
In each of the following cases indicate whether the change in profits due to the spread effect was i) greater than ii) less than, or iii) equal to the change in profitability due to the repricing GAP. In some cases you may not be able to tell; indicate which ones.
∆ spread
Answer
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