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answer the following a. You are provided with the following information: a bank has a net income after taxes of $7.0 billion; it has assets

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a. You are provided with the following information: a bank has a net income after taxes of $7.0 billion; it has assets of $300 billion; and a bank capital of $25 billion. What is the bank's return on assets; its return on equity, and its equity multiplier?

b. Suppose you are the manager of a bank that has $150 billion of assets that have an average duration of four years and who has $135 billion of liabilities that have an average duration of six years. Conduct a duration analysis for the bank, and show what will happen to the net worth of the bank if interest rates rise by 3 percentage points. What actions could you take to reduce the bank's interest-rate risk?

c. We have discussed the principal-agent problem as a form of moral hazard. Discuss the unique problems a bank manager faces in terms of trying to please the owners of the bank and at the same time trying to appease regulators.

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