Question
Consider the following balance sheet for WatchoverU Savings Incorporated ($ in millions): Assets Liabilities Floating-rate mortgages (currently 10% annually) $ 54 NOW accounts (currently 6%
Consider the following balance sheet for WatchoverU Savings Incorporated ($ in millions):
| Assets | Liabilities | ||
|---|---|---|---|
| Floating-rate mortgages (currently 10% annually) | $ 54 | NOW accounts (currently 6% annually) | $ 74 |
| 30-year fixed-rate loans (currently 7% annually) | 54 | Time deposits (currently 6% annually) | 17 |
| Equity | 17 | ||
| Total | $ 108 | $ 108 |
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 1 percent? (For all requirements, do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places. (e.g., 32.16))
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Cornett, Otgo Erhemjamts
11th Edition
1264413041, 9781264413041
