how would you find the gap to earnings ratio for question 4?

Excessive competition could cause losses, erosion of relationships, and detrimental actions for both borrowers and lenders Excessive lending risks could result from overly aggressive or ill-conceived competitive actions of lenders. Some lending operations could become smaller and less efficient. Instability in credit availability could result from lenders exiting the industry, redirecting their lending activities to other types of borrowers, or failing to identify all qualified borrowers. Unintended structural changes in borrowing units could take place. Question 4 - 15 Points What is the Gap and Gap Ratio for an institution with $70 Million of rate-sensitive assets and $55 Million of rate-sensitive liabilities? Gape Tomilien-55 million 15 million Garratio = 70 mitten/55 mitten = 1.27 Question 5 - 10 Points Using Question 4 scenario, Calculate the Gap to Earnings asset ratio. Question 6 - 15 Points Find the risk-adjusted return on capital for a net interest margin of 2.5%, expected loss of 1%, operating costs including taxes of 1.75% and economic capital requirement of 3% that provides 99% safety over and above the expected loss of 0.5%. 6025--0175-.de! RAROLE