2. Consider the following balance sheet for XYZ bank. (in millions): a) b) c) Assets Floating-rate mortgages (currently 11% annually) 30-year fixed-rate loans (currently 8% annually) $67 $52 Liabilities and Equity. 1 year time deposits (currently 5% annually) 3-year Time deposits (currently 6% annually Equity Total Liabilities & Equity $119 $79 $24 $16 Total Assets $119 What is XYZ's expected net interest income at year-end? [4 marks] What will be the net interest income at year-end if interest rates rise by 1.5 percent? [4 marks] Using the cumulative repricing gap model, what is the expected net interest income for a 2 percent increase in interest rates? [4 marks]

2. Consider the following balance sheet for XYZ bank. (in millions): a) What is XYZs expected net interest income at year-end? [4 marks] b) What will be the net interest income at year-end if interest rates rise by 1.5 percent? [ 4 marks] c) Using the cumulative repricing gap model, what is the expected net interest income for a 2 percent increase in interest rates? [4 marks]