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Consider the following balance sheet for ABC Company (in millions): Assets Variable-rate mortgages (interest-rate 10% annually) 30-year fixed-rate loans (interest-rate 7% annually) $50 $70 Liabilities
Consider the following balance sheet for ABC Company (in millions): Assets Variable-rate mortgages (interest-rate 10% annually) 30-year fixed-rate loans (interest-rate 7% annually) $50 $70 Liabilities and Equity 1-year fixed deposits (interest-rate 6% annually) 3-year fixed deposits (interest-rate 7% annually) Equity Total liabilities & equity $50 $20 $10 $100 Total assets $100 What is the expected net interest income if interest rates on Rate Sensitive Assets (RSAs) increase by 2 percent but interest rates on Rate Sensitive Liabilities (RSLs) increase by 1 percent
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