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Consider the following balance sheet for WatchoverU Savings Inc. ($ in millions): Assets Liabilities Floating-rate mortgages (currently 15% annually) $ 57 NOW accounts (currently 11%
Consider the following balance sheet for WatchoverU Savings Inc. ($ in millions):
| Assets | Liabilities | ||||||
| Floating-rate mortgages (currently 15% annually) | $ | 57 | NOW accounts (currently 11% annually) | $ | 77 | ||
| 30-year fixed-rate loans (currently 12% annually) | 57 | Time deposits (currently 11% annually) | 20 | ||||
| Equity | 17 | ||||||
| Total | $ | 114 | $ | 114 | |||
a. What is WatchoverUs expected net interest income at year-end? b. What will be the net interest income at year-end if interest rates rise by 2 percent?
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