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.
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Assume a bank has $200 million of assets with a duration of 2.5 and $190 million of liabilities.....
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- 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)?Eagle Bank has the following interest-sensitive assets and interest-sensitive liabilities. Amount maturing in Amount maturing in 30 days (million) 570 330 116 Interest-sensitive assets Loans Securities 30 days (million) 810 63 Interest rate on interest-sensitive assets is 5% Interest rate on interest-sensitive liabilities is 3% Interest-sensitive liabilities Savings deposits Time deposits Money market The interest rate is expected to rise 1% (for both interest-sensitive assets and liabilities) 30 days later. Will Eagle Bank benefit from the interest rate rise? Explain your answer. Show your calculations.Ubu Bank has the following assets and liabilities : Asset X has a maturity of 3 years and a market value of $600,000 and asset Y has a maturity of 9 years and a market value of $500,000. Liability A has a maturity of 2 years and a market value of $700,000 and liability B has a maturity of 8 years and a market value of $700,000. What is the maturity gap of the bank ? Round your final answer to 2 decimal places. E.g. if the final answer is -3.59 years, type -3.59 in the answer box. If the final answer is 3.59 years, type 3.59 in the box .
- Suppose the Royal Bank of Pullman has the following assets: cash = 100 (with modified duration of 0) and a 10-year loan worth $900 (with modified duration of 9). Its liabilities are a CD worth $800 (with a modified duration of 2). If interest rates rise by 1% the bank's equity will fall by ________ %. A. 9 B. 5.6 C. 2 D. 6.5Use the balance sheet of a bank below to answer the following. The duration of asset is 1.5 years, the duration of liabilities 2 years. Assets Liabilities Required Reserves 8 m Money Market Deposits 50 m Excess Reserves 7 m 3-year CDs 60 m T-bills 85 m Capital 10 m Mortgages 15m Commercial paper 5m What happens to the value of liability if the interest rate goes down by 1%? up by 2% down by 2% O down by 1.36% O up by 1.36%A bank has an interest rate spread of 150 basis points on $30 million in earning assets funded by interest-bearing liabilities. However, the interest rate on its assets is fixed and the interest rate on its liabilities is variable. If all interest rates go up 50 basis points, the bank's new pretax net interest income will be __________. a. $600,000 b. $450,000 c. $300,000 d. $250,000 e. $175,000 Clear my choice
- A bank's duration gap is 1.92, and the current interest rate used to value all of the bank's assets and liabilities is 5.2%. What is the change in the bank's net worth (in % of TA) if the interest rate changes to 8%?A bank is earning 6% on its $150 million in earning assets and is paying 4.75% on its liabilities. The bank's Net Interest Margin is __________________. A. 6.00% B. 10.75% C. 4.75% D. 1.25%In the example below, we will use year-end assets. Bank A receives $70 in deposits at 5% and, together with 40 in equity, makes a loan of $90 at 7%. The remaining of assets is G-Bond. We will ignore taxes for the moment. Bank A Cash Reserves for Deposit ? Loan 7% $90 G-Bond 5% ? Deposits 5% $70 Equity $40 Total Assets $? Total Equity and Deposit $110 If Cash Reserves for deposit is at least 8% of the deposit under the Basel Accord, how much of the G-Bond Bank A should purchase? $17 $14 $16 $18 $20 $15 $19 $21
- PLEASE SOLVEIn the example below, we will use year-end assets. Bank A receives $70 in deposits at 5% and, together with 40 in equity, makes a loan of $90 at 7%. The remaining of assets is G-Bond. We will ignore taxes for the moment. NIM=Profit/Interest revenue Bank A Loan 7% $90 G-Bond 5% ? Deposits 5% $70 Equity $40 Total Assets $? Total Equity and Deposit $110 The amount of G-bond is $50 $70 $20 $40 $80 $60 $30 $10Suppose a bank has $1,000 in deposits and $100 in reserves. If the desired reserve ratio is 5 percent, how much can this bank increase its loans? O a. $50 O b. $80 O c. $0 O d. $400 O e. $100