Assets A financial institution has the following market value balance sheet structure: Liabilities and Equity Cash $ 2,900 Certificate of deposit $ 11,900 Bond 10,200 Equity 1,200 Total assets $ 13,100 Total liabilities and equity $ 13, 100 a. The bond has a 10-year maturity, a fixed-rate coupon of 9 percent pald at the end of each year, and a par value of $10,200 The certificate of deposit has a 1-year maturity and a 5 percent fixed rate of Interest . The flexpects no additional asset growth What will be the net interest income (NII ) at the end of the first year? (Note Net Interest income equals interest income minus interest expense b. If at the end of year 1 market interest rates have increased 100 basis points (1 percent), what will be the net interest income for the second year? is the change in Nil caused by reinvestment risk or refinancing risk? c. Assuming that market interest rates increase 1 percent, the bond will have a value of $9,613 at the end of year 1. What will be the market value of the equity for the Fi? Assume that all of the Nil in part (a) is used to cover operating expenses or is distributed as dividends d. If market interest rates had decreased 100 basis points by the end of year 1, would the market value of equity be higher or lower than $1,2002 e. What factor has caused the changes in operating performance and market value for this Fl? Complete this question by entering your answers in the tabs below. Required A Required B Required Required Required The bond has a 10-year maturity, a fixed-rate coupon of 9 percent pald at the end of each year, and a par value of $10,200. The certificate of deposit has a 1-year maturity and a 5 percent fixed rate of interest. The FI expects no additional asset growth. What will be the net interest income (NTT) at the end of the first year? (Note: Net interest income equals interest income minus interest expense.) Net interest income (NIB) impian Required B > Required A Required B Required C Required D Required E N If at the end of year 1 market interest rates have increased 100 basis points (1 percent), wl for the second year? Is the change in NII caused by reinvestment risk or refinancing risk? Net interest income (NII) Is the change in NII caused by Complete this question by entering your answers in the tabs below. Required A Required B Required c Required D Required E Assuming that market interest rates increase 1 percent, the bond will have a value of $9,6 be the market value of the equity for the FI? Assume that all of the NII in part (a) is used distributed as dividends. Market value of the equity for the FI Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Required E If market interest rates had decreased 100 basis points by the end of year 1, would the market value of equity be hi $1,2007 (Negative amounts should be indicated by a minus sign.) The market value of the equity would be because the value of the bond (assets) would be and the value of the CD would Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D uired E What factor has caused the changes in operating performance and market value for this FI? Factor that caused the changes in operating performance and market value for this Fi?