Explanation:

Correct Answer: C

Explanation: The Available Funds Gap (AFG) is calculated as: AFG = (Current and expected loans and investments the bank plans on making) − (Current and expected deposit inflow and other available funds)

1. Calculate Current and expected loans and investments:

New loan requests = $250.00 million
Treasuries purchase plans = $100.00 million
Anticipated drawings on credit lines = $140.0 million
Total Loans & Investments = $250.00 + $100.00 + $140.00 = $490.00 million

2. Calculate Current and expected deposit inflows:

Current deposit inflows today = $110.00 million
Expected deposit inflows next week = $230.00 million
Total Deposit Inflows = $110.00 + $230.00 = $340.00 million

3. Calculate the Available Funds Gap:

AFG = $490.00 million - $340.00 million = $150.00 million

20.14.2. Suppose a commercial bank situation today includes the following:

New loan requests (that meet quality standards) of `$250.00` million

Plans to purchase `$100.00` million in Treasuries in the coming week

Anticipates `$140.0` million in drawings on credit lines from its best corporate customers

Deposits and other customer funds received today (aka, current deposit inflows) total `$110.00` million

Expected deposit inflows of `$230.0` million in the coming week

What is the bank’s available funds gap (AVG)? Hint: Available funds gap (AFG) = (Current and expected loans and investments the bank plans on making) − (Current and expected deposit inflow and other available funds).

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Last updated: July 5, 2026 at 07:00

$37.5 million

$75.0 million

$150.0 million

$300.0 million

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