If a bank has $100 million in total assets with $40 million in rate-sensitive assets, and $90 million in total liabilities with $50 million in rate-sensitive liabilities, then what will happen to the net interest margin (NIM) if interest rates rise by 5 percentage points, say from 10 to 15%? A) increase by 2% C) decline by $0.5 million B) decline by 0.5% D) increase by $2 million
If a bank has $100 million in total assets with $40 million in rate-sensitive assets, and $90 million in total liabilities with $50 million in rate-sensitive liabilities, then what will happen to the net interest margin (NIM) if interest rates rise by 5 percentage points, say from 10 to 15%? A) increase by 2% C) decline by $0.5 million B) decline by 0.5% D) increase by $2 million
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![18) If a bank has $100 million in total assets with $40 million in rate-sensitive assets, and $90 million in
total liabilities with $50 million in rate-sensitive liabilities, then what will happen to the net interest
margin (NIM) if interest rates rise by 5 percentage points, say from 10 to 15%?
A) increase by 2%
C) decline by $0.5 million
B) decline by 0.5%
D) increase by $2 million](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F729163a9-698e-4825-ab6d-075ea45edc37%2Fb7440ed6-b0db-425a-9ee2-e0b137423bb6%2Fpm0b7mt_processed.png&w=3840&q=75)
Transcribed Image Text:18) If a bank has $100 million in total assets with $40 million in rate-sensitive assets, and $90 million in
total liabilities with $50 million in rate-sensitive liabilities, then what will happen to the net interest
margin (NIM) if interest rates rise by 5 percentage points, say from 10 to 15%?
A) increase by 2%
C) decline by $0.5 million
B) decline by 0.5%
D) increase by $2 million
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