Answer the following questions regarding the balance sheet given below. Assume £1 = $1.40. a) Is this bank net short or net long? b) What is the net interest income (NII) if the value of the £ appreciates to $1.65? c) What is the net interest margin (NIM) if the value of the £ depreciates to $1.15? Assets Liabilities and Equity $800M in USD $200M in GBP $300M in USD $700M in GBP Country US UK Deposit Rate 6% 8% Lending Rate 7% 9%

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Financial Ratios

A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.

Return on Equity

The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.