Question
Consider the following balance sheet for Watchover Savings, Inc. (in millions): Assets Liabilities and Equity Floating-rate mortgages (currently 10% p.a.) $ 80 Now deposits (currently
Consider the following balance sheet for Watchover Savings, Inc. (in millions): |
Assets | Liabilities and Equity | ||||
Floating-rate mortgages (currently 10% p.a.) | $ | 80 | Now deposits (currently 6% p.a.) | $ | 115 |
30-year fixed-rate loans (currently 7% p.a.) | 100 | 5-year time deposits (currently 6% p.a.) | 24 | ||
Equity | 41 | ||||
Total | $ | 180 | Total | $ | 180 |
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)) |
Net interest income | $ million |
b. | What will be the net interest income at year-end if interest rates rise by 2 percent? (Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16)) |
Net interest income | $ million |
c. | Using the one-year cumulative repricing gap model, what is the change in the expected net interest income for a 2 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)) |
Net interest income | $ million |
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