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Suppose an investor has the yield on rate-sensitive and non-rate-sensitive assets average 10 percent and 11 percent respectively. Whereas rate-sensitive and non-rate-sensitive liabilities cost an
Suppose an investor has the yield on rate-sensitive and non-rate-sensitive assets average 10 percent and 11 percent respectively. Whereas rate-sensitive and non-rate-sensitive liabilities cost an average of 8 percent and 9 percent respectively. During the coming week, the investor holds $1700 million in rate sensitive assets out of total $4100 asset while rate-sensitive liabilities are $1800 million. a) If interest rate on assets and liabilities remains constant, then what will be net interest income of this investor? b) If the market interest rates on the rate-sensitive assets rise to 10.75 percent and on rate-sensitive liabilities rise to 8.5 percent, what will be net interest income for this investor
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