QUESTION TWO FINC Bank Ghana Ltd is one of the growing Universal Banks in Ghana. The balance sheet extracts of the Bank as the 30 June, 2013 was as follows: Assets Loans @ 25% Floating rate Overdrafts @ 24% Floating Capital and Liabilities Deposits: 20,000,000 10,000,000 Current accounts @zero rate (Non rate sensitive 26,000,000 rate Investments @ 22% Fixed Rate 12,000,000 Savings Accounts@10% Floating rate 8,000,000 Interbank Placements @ 17% Fixed deposits @ 20% 5,000,000 16,000,000 Overnight Floating Fixed rate Other Assets @zero interest Capital @zero interest 8,000,000 5,000,000 rate (non rate sensitive) rate (Non rate sensitive) Total Assets 55,000,000 Total Capital and Liabilities 55,000,000 ****All interest rates are quoted on per annum basis. Required: (a) When is a balance sheet said to be: (i) Assets sensitive (ii) Liabilities sensitive (b) Is the above balance sheet Assets or liabilities sensitive and why? (c) Calculate the annualized Net Interest Income (NII) for the Bank (d) If interest rates were to go up by 200 basis points: (1) What will be the new annualized net interest income (NII) (ii) What will be the impact on the Bank in terms of annualized net interest income (NII)