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Suppose that a bank has $10 billion of one-year loans and $30 billion of five year loans. These are financed by $35 billion of one-year

Suppose that a bank has $10 billion of one-year loans and $30 billion of five year loans. These are financed by $35 billion of one-year deposits and $5 billion of five-year deposits. The bank has equity totaling $2 billion and its return on equity is currently 12%. Estimate what change in interest rate next year would lead to the bank

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