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ACME Bank has stockholders equity of $400 million with a capital cost of 6%, a loan portfolio of $1 billion at a weighted average interest
ACME Bank has stockholders equity of $400 million with a capital cost of 6%, a loan portfolio of $1 billion at a weighted average interest rate and term of 5% and 7.5 years. The bank also has demand and time deposits of $800 million with a weighted average rate and term of 2.5% and 1.5 years. Which of the following is true of the bank? A. the banks net interest margin is 2.5% and $30 million. B. the duration mismatch of the bank is 7.5 years. C. the banks debt to equity ratio is .5% D. the banks net interest margin is $6 million.
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