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A bank's base case net interest income is $5,000,000. If the the interest rate increases by 1%, its expected net interest income will be $5,300,000.

A bank's base case net interest income is $5,000,000. If the the interest rate increases by 1%, its expected net interest income will be $5,300,000. If interest rate increases by 3%, its expected net interest income will be $5,600,000. On other hand, if interest rate decreases by 1%, its expected net interest income will be $4,750,000. If interest rate decreases by 3%, its expected net interest income will be $4,200,000. Which of the following is most likely true?

The bank is liability sensitive.

The bank is asset sensitive.

The bank has no embedded options in its assets and liabilities.

None of the above.

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