Question
The bank balance sheet below lists the categories of assets and liabilities, along with the total amount of each category, and the amount in each
The bank balance sheet below lists the categories of assets and liabilities, along with the total amount of each category, and the amount in each category that is "interest rate sensitive" or repriced within one year. Calculate the existing Dollar Gap for the bank. Next, calculate the effect (change) on this bank's Net Interest Income if interest rates fall or decrease by 1 percentage point or 100 bp. "%" denotes either the current interest rate earned earned or paid on the designated asset or liability category. RSA and RSL denote interest rate sensitive assets and liabilities, respectively, that are repriced within one year. Note, you do not have to include either the existing or new level of Net Interest Income, as I'm only asking for the change in Net Interest Income. Please show your work in order to receive credit.
| Assets | Amount | % | RSA |
| Liabilities and Equity | Amount | % | RSL |
| Cash | 80 | 0.0% |
|
| Non-interest deposits | 100 | 0.0% |
|
| Securities | 250 | 6.0% | 100 |
| NOW checking | 200 | 2.0% |
|
| Loans, net | 620 | 7.0% | 248 |
| MMDA | 300 | 4.0% | 300 |
| Fed funds sold | 0 |
|
|
| CDs | 150 | 5.0% | 75 |
| Non-earning assets | 50 |
|
|
| Fed Funds purchased | 150 | 3.0% | 150 |
|
| $1,000 |
|
|
| Equity | 100 |
|
|
|
|
|
|
|
|
| $1,000 |
|
|
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