6.

The T-account below shows the balance sheet of Santander.

Assets:

Reserves 10 million

Loans 400 million

Securities 200 million

Liabilities:

Deposits 500 million

Borrow from other banks 20 million

Borrow from FED 50 MILLION

Bank Capital 40 million

A) Loans, securities, borrowing from other banks, and borrowings from the Fed are rate-sensitive. The other items are fixed-rate.

Based on the balance sheet above, if interest rate increases by 5.6%, how much would the profit of Santander change (in millions of $)? Round your answer to at least 2 decimal places. Enter an increase as a positive number and a decrease as a negative number. (E.g. a decrease of $12,345,678 in profit should be entered as -12.35)

B) The assets of Santander have an average duration of 8 years. The liabilities of Santander have an average duration of 3 years.

Based on the balance sheet above, if interest rate decreases by 3.8%, what is the change in net worth (in millions of $) of the bank? Round your answer to at least 2 decimal places. An increase in net worth should be entered as a positive number and a decrease in net worth should be entered as a negative number. (E.g. A decrease of $12,345,678 in net worth should be entered as -12.35)