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Suppose you are a bank manager. Interest rates for lending are currently at 4.5% and borrowing at 3.8%. You strongly interest rates will rise in
Suppose you are a bank manager. Interest rates for lending are currently at 4.5% and borrowing at 3.8%. You strongly interest rates will rise in the next six month and the new lending rate will increase to 4.8%, while the new borrowing rate will increase to 4.25% Use the Maturity Buckets below to answer the following questions: Maturity Bucket +1 Day to 3-Months +3 Months to 6 Month +6 Months to 12 Mont Assets Liabilities 600 475 320 410 745 590 +1 year to 5 Years 150 30 How should the bank manager adjust the bank's six-month repricing gap to take advantage of this anticipated rise? a. What if the manager believed rates would fall to 4.25% (lending) and 3.6% (borrowing) in the next six months? b
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