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ACC - Consider the following balance sheet for X Savings

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Question;Consider the following balance sheet for X Savings (in millions).AssetsFloating rate mortgages $ 40(Currently 9% annuall7)30-year fixed rate loans(Currently 6% annuall7) 40Total Assets 80Liabilities and Equity1-year time deposits(currently 5% annually) $ 503-year time deposits(Currently 7% annually) 20Equity 10Total liabilities and equity 80;a. What Is X?s expected net interest income at year end?b. What will net interest income be if interest rates rise by 1 percent?c. Using the cumulative repricing gap model, what is the expected net interest income for a 1 percent increase in interest rates?d. What will net interest income be at year end if interest rates on rate sensitive assets increase by 1% but interest rates on rate sensitive liabilities increase by 0.5%?

 

Paper#44240 | Written in 18-Jul-2015

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