Question: problem. Save it for lte Suppose that your bank buys a T-bill yielding 4 percent that matures in six months and finances he purchase with

problem. Save it for lte Suppose that your bank buys a

problem. Save it for lte Suppose that your bank buys a T-bill yielding 4 percent that matures in six months and finances he purchase with a three-month time deposit paying 3 percent. The purchase price of the T-bill is $3 million financed with a $3 million deposit. a. Calculate the six-month GAP associated with this transaction. What does this GAP measure indicate about interest rate risk in this transaction? b. Calculate the three-month GAP associated with this transaction. Is this a better GAP measure of the bank's risk? Why or why not? Step-by-step solution There is no solution to this problem yet. Get help from a Chegg subject expert ASK AN EXPERT

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