Banking Practice Showdown 2026 – Vault into Your Future Success!

Question: 1 / 400

What does a cumulative GAP measure in a bank's finances?

The difference between rate-sensitive assets and liabilities in one period

Rate-sensitive assets compared to liabilities across all time buckets

A cumulative GAP measures the difference between rate-sensitive assets and rate-sensitive liabilities across multiple time periods or "buckets." It provides insight into how these elements interact over time, allowing financial institutions to assess their exposure to interest rate fluctuations cumulatively. This is particularly important for understanding how changes in interest rates can affect income levels and financial stability in both the short and longer term.

In this context, the correct answer highlights the broader perspective of assessing rate sensitivity across all time buckets, which is crucial for managing interest rate risk. This holistic view helps banks manage liquidity and profitability as interest rates evolve, influencing strategic decisions related to asset and liability management.

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The earning assets to total liabilities ratio

The average liability interest rate to earning assets ratio

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