Question 9

Consider the following balance sheet for Watchover Savings Inc. (in millions):

Assets		Liabilities and Equity
Floating-rate mortgages (8%)	$100	NOW deposits (4%)	$125
30-year fixed-rate loans (7%)	$150	5-year time deposits (5%)	$75
		Equity	$50
Total	$250	Total	$250

What will be the decline in the net interest income at year-end if interest rates rise by 3 percent?

		0.5 million
		0.25 million
		0.75 million
		0.20 million
		0.15 million