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For every $100 in assets, a bank has $30 in interest-rate sensitive assets, and the other $70 in non-interest-rate sensitive assets. The same bank has
For every $100 in assets, a bank has $30 in interest-rate sensitive assets, and the other $70 in non-interest-rate sensitive assets. The same bank has $60 for every $100 in liabilities in interest-rate sensitive liabilities while the other $40 are in liabilities that are not interest-rate sensitive. If the interest rate on assets decreases from 6 to 5%, and the interest rate on liabilities decreases from 4 to 3%, the impact on the bank's profits per $100 of assets will be O a reduction of $0.30. a reduction of $3.00. an increase of $0.30. zero since the interest rates on assets and liabilities fell by the same amount
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