Question
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. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started