General Accounting Assume a bank has $200 million ofassets with a duration of 2.5 and $190million of liabilities with a duration of1.05. If interest rates increase from 5percent to 6 percent, the net worth ofthe bank falls by:A) $1 million.B) $2.4 million.C) $3.6 million.D) $4.8 million.

Step 1: Define Net WorthIt is the net amount that is invested in the business or the net financial…

Answered: Assume a bank has $200 million of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Assume a bank has $200 million of assets with a duration of 2.5 and $190 million of liabilities.....
6. Assume a bank has $200 million of assets with a duration of 2.5, and $190 million of liabilities with a duration of 1.05. If interest rates increase from 5 percent to 6 percent, what is the effect on the net worth of the bank? Make sure to show your work
A bank has earning assets of $100 million including $30 million of securities that pay an interest rate of 3%, and $70 million of loans that pay an interest rate of 6% financed by $100 million of deposits paying an interest rate of 3%. What is the bank's Net Interest Margin (NIM)?
A bank has a net income after taxes of $4 million, assets of $200 million, and bank capital of $10 million. What is the bank's return on assets (ROA)? Write your answer as a percent rate.
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Lambrook Bank has the following assets and liabilities: Asset A has a maturity of 4 years and a market value of $600,000 and asset B has a maturity of 6 years and a market value of $800,000. Liability X has a maturity of 2 years and a market value of $200,000 and liability Y has a maturity of 5 years and a market value of $300,000. What is the maturity gap of the bank? . .
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Assume a bank has $200 million of assets with a duration of 2.5 and $190 million of liabilities with a duration of 1.05. If interest rates increase from 5 percent to 6 percent, the net worth of the bank falls by: A) $1 million. B) $2.4 million. C) $3.6 million. D) $4.8 million.