Assume a credit union has $350 million of assets with a duration of 3.2 and $330 million of liabilities with a duration of 1.8. If interest rates decrease from 4.5 percent to 3.5 percent, the net worth of the credit union changes by: A) $2.6 million B) $4.1 million C) $5.3 million D) $6.8 million
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- Suppose a bank has the following Balance Sheet Assets Liabilities RSA = 120 RSL = 90 FRL = X FRA = 110 (Fixed rate liabilities can be found if needed by determining what number it must be to balance the balance sheet.) Suppose all the Assets and Liabilities were set last year when the interest rate was 10, if the interest rate has changed by 2% since that time what is the current cost from all of the bank's liabilities? Your Answer:Assume the average management cost per account per year is $200 and the average fees earned per account per year is $170. The average annual size of account is $1800. What is the average implicit interest rate (round to two decimals)? Select one: a. 4.86% b. 1.67% c. 15% d. -1.67%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. 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 $10
- Suppose Bank A has $35 million in rate-sensitive assets, $70 million in fixed rate assets, $70 million in rate sensitive liabilities, and $35 million in fixed rate liabilities and equity capital. Calculate the change in Bank A’s profit as a result of an increase in market interest rates of 2 percentage points.Assume that a firm has a $1,000,000 line of credit at an 4.94 percent rate of interest that requires a 17.0 percent compensating balance. If the firm borrowed $359,000 for 1 year, calculate amount of money available to use. Round the answer to two decimal places. Your Answer:A bank has an average asset duration of 5 years and an average liability duration of 3 years.This bank has total assets of $500 million and total liabilities of $250 million. Currently,market interest rates are 10 percent. If interest rates fall by 2 percent (to 8 percent), what isthis bank's change in net worth?6A. Net worth will decrease by $31.81 million.B. Net worth will increase by $31.81 million.C. Net worth will increase by $27.27 million.D. Net worth will decrease by $27.27 million.
- Subject:- financeCalculate the interest? General accountingSuppose that P dollars in principal is invested in an account earning 2.1% interest compounded continuously. At the end of 2 yr, the amount in the account has earmed $193.03 in interest. a. Find the original principal. Round to the nearest dollar. (Hint: Use the model A = Pe" and substitute P + 193.03 for A.) b. Using the original principal from part (a) and the model A = Pe", determine the time required for the investment to reach $6000. Round to the nearest tenth of a year.
- 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? . .Use the following information about IGI security dealer. Market yields are in parenthesis, and amounts are in millions. Assets Liabilities and Equity Cash $10 Overnight Repos $170 1 month T-bills (7.05%) 75 Subordinated debt 3 month T-bills (7.25%) 75 7-year fixed rate (8.55% 150 2 year T-notes (7.50%) 50 8 year T-notes (8.96%) 100 5 year munis (floating rate) (8.20% reset every 6 months) 25 Equity 15…Suppose that the assets of a bank consists of $100 million of loans to A rated corporations. The PD for the corporations is estimated as 0,1% and LGD is 60%. The average maturity is 2.5 years for corporate loans. What is RWA?.