Static Gap
Definition of 'Static Gap'A measure of exposure or sensitivity to interest rates. Static gap is calculated as the difference between assets and liabilities of comparable repricing periods. Static gap can be calculated for short-term and long-term periods. Minus signs in the calculated gap indicate that you have a greater number of liabilities than assets maturing at that particular maturity, and therefore have an exposure to rising rates. |
|
Investopedia explains 'Static Gap'Static gap is usually calculated for periods of less than a year – often 0 to 30 days or 31 to 90 days – but can also be calculated for multiple periods. Simple static gaps are inherently imprecise measurements because they do not take into account such factors as interim cash flow, average maturity and prepayment of the loan. |
Related Definitions
Articles Of Interest
-
How Interest Rates Affect The U.S. Markets
Interest rates can have both positive and negative effects on U.S. stocks, bonds and inflation. -
Interest Rates And Your Bond Investments
By understanding the factors that influence interest rates, you can learn to anticipate their movement and profit from it. -
Forces Behind Interest Rates
Get a deeper understanding of the importance of interest rates and what makes them change. -
What does a cut in interest rates mean for the stock market?
When the next Federal Reserve meeting is expected to bring interest rate cuts or increases, it is wise, as a stock investor, to be aware of the potential effects behind such decisions. Although ... -
Who determines interest rates?
In countries using a centralized banking model, interest rates are determined by the central bank. In the first step of interest rate determination, the government's economic observers create ... -
What Type Of Trader Are You?
There are different ways stock traders attempt to profit from market movements. Which of the strategies do you use? -
Mergers And Acquisitions: Understanding Takeovers
In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game. -
Interpreting A Company's IPO Prospectus Report
Learn to decipher the secret language of the IPO prospectus report - it can tell you a lot about a company's future. -
After A Big Recovery Rally, It's Up To Renew Blue For Best Buy
Investors have bought Best Buy's story, but this quarter shows that a lot of work remains to be done -
If You Don't Mind Volatility, Deere Could Still Do Alright
Though Deere's shares sold off after earnings, the business model is sound and rolling along.
Free Annual Reports