Consider the following balance sheet for Watchovia Bank ( in millions): a. What is Watchovia's expected net

Question:

Consider the following for Watchovia Bank ( in millions):

Consider the following balance sheet for Watchovia Bank ( in

a. What is Watchovia's expected net interest income at year-end?
b. What will net interest income be at year-end if interest rates rise by 2 percent?
c. Using the one-year cumulative repricing gap model, what is the expected net interest income for a 2 percent increase in interest rates?
d. What will net interest income be at year-end if interest rates on RSAs increase by 2 percent but interest rates on RSLs increase by 1 percent? Is it reasonable for changes in interest rates on RSAs and RSLs to differ? Why?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...