Consider the following Balance Sheet

ASSETS		LIABILITIES
Floating rate mortgages (currently 15% annually)	350	Demand deposits (currently 6% annually)	250
30 years fixed rate loans (currently 15% annually)	250	1 year CD (currently 8% annually)	150
		Equity	200
	600		600

1. What is the expected net interest income (NII) at year end?

2. What is the expected net interest income at year end if interest rates increase by five percent (5%).

3. What is the expected net interest income at year end if interest rates grew by 300 basis points on assets but remain stable on liabilities