Question
Consider the following balance sheet for Watchover Savings Incorporated (in millions): Assets Liabilities and Equity Floating-rate mortgages (currently 12% per annum) $ 96 Now deposits
Consider the following balance sheet for Watchover Savings Incorporated (in millions):
Assets | Liabilities and Equity | ||
---|---|---|---|
Floating-rate mortgages (currently 12% per annum) | $ 96 | Now deposits (currently 8% per annum) | $ 123 |
30-year fixed-rate loans (currently 9% per annum) | 108 | 5-year time deposits (currently 8% per annum) | 38 |
Equity | 43 | ||
Total | $ 204 | Total | $ 204 |
a. What is Watchovers expected net interest income at year-end? (Enter your answer in millions rounded to 2 decimal places. 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. 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.
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