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2. Suppose a bank has $10 billion of one-year loans and $30 billion of ten-year loans. The banks loan portfolio is financed by $5 billion
2. Suppose a bank has $10 billion of one-year loans and $30 billion of ten-year loans. The banks loan portfolio is financed by $5 billion of one-year deposits and $35 billion of ten-year loans. Discuss the impact on the banks net interest income when interest rates decrease by 1% every year for the next three years.
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