Question
Consider the following balance sheet for Watchover Savings Inc. (in millions): Assets (currently 12% p.a.) $ 82 30-year fixed-rate loans (currently 9% p.a.) 101 Liabilities
Consider the following balance sheet for Watchover Savings Inc. (in millions): Assets
(currently 12% p.a.) $ 82
30-year fixed-rate loans (currently 9% p.a.) 101
Liabilities and equity
Now deposits (currently 8% p.a.) | $ | 116 |
5-year time deposits (currently 8% p.a.) $29
Equity $38
Total $ 183
a. What is Watchovers expected net interest income at year-end? (Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16))
b. What will be the net interest income at year-end if interest rates rise by 3 percent? (Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16))
c. Using the one-year cumulative repricing gap model, what is the change in the expected net interest income for a 3 percent increase in interest rates? (Negative amount should be indicated by a minus sign. Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16))
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