Calculate the expected change in the net interest income for the bank if interest ratesrise by 1 percent on both RSAS and RSLs.-$625,500-$188,000-$688,000$188,000-$125,500 [Table 1] Consider the following balance sheet for MMC Bancorp (in millions ofdollars):Assets1. Cash and due from2. Short-term consumer loans(1-year maturity)3. Long-term consum er loans(2-year maturity)4. Three-month T-bills5. Six-month T-notes6. 3-year T-bonds7. 10-year, fixed-rate mortgages8. 30-year, floating-rate mortgages(reset every nine months)9. PremisesTotal Assets$6.2562.5031.3037.5043.7075.0025.0050.006.25$337.50Liabilities and Equity1. Equity capital (fixed)2. Demand deposits3. One-month CDs4. Three-month CDs5. Three-month bankers' acceptances6. Six-month commercial paper7. 1-year time deposits8. 2-year time depositsTotal Liabilities and Equity$25.0050.0037.5050.0025.0075.0025.0050.00$337.50

ANSWER:- $ 187,000 NEAREST VALUE TO 187,000 IS ANSWER SO ANSWER IS $ 188,000 EXPLANATION:-…

Answered: [Table 1] Consider the following…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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[Table 1] Consider the following balance sheet for MMC Bancorp (in millions of dollars): Assets 1. Cash and due from 2. Short-term consumer loans (1-year maturity) 3. Long-term consumer loans (2-year maturity) 4. Three-month T-bills 5. Six-month T-notes 6. 3-year T-bonds 7. 10-year, fixed-rate mortgages S. 30-year, floating rate mortgages (reset every nie months) 9. Premises Total Assets $6.25 62.50 31.30 37.50 43.70 75.00 25.00 50.00 6.25 $337.50 Liabilities and Equity 1. Equity capital (fixed) 2. Demand deposits 3. One-month CDs 4. Three-month CDs 5. Three-month bankers' acceptances 6. Six-month commercial paper 7. 1-year time deposits 8. 2-year time deposits Total Liabilities and Equity $25.00 50.00 37.50 50.00 25.00 75.00 25.00 50.00 $337.50
Consider the following balance sheet for Whiz Financial Services Limited: Assets K Liabilities K Cash 6.25 Equity 25.00 Short term consumer loans (1 yr maturity)62.50 Demand deposits 50.00 Long term consumer loans (2 yr maturity)31.25 Client Savings accounts 37.50 3 month T-Bills 37.50 3 month CDs 50.00 6 month T-Bills 43.75 3 months Bankers Acceptances 25.00 3 year T-Bonds 75.00 6 month commercial paper 75.00 10 year, fixed rate mortgages 25.00…
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.
Consider the following balance sheet for Whiz Financial Services Limited: Assets K Liabilities K Cash 6.25 Equity 25.00 Short term consumer loans (1 yr maturity) 62.50 Demand deposits 50.00 Long term consumer loans (2 yr maturity) 31.25 31.25 Client Savings accounts 37.50 3 month T-Bills 37.50 3 month CDs 50.00 6 month T-Bills 43.75 3 months Bankers Acceptances 25.00 3 year T-Bonds 75.00 6 month commercial paper 75.00 10 year, fixed rate mortgages 25.00 1 year time deposits 25.00 30- year floating rate mortgages 50.00 2-year time deposits 50.00 premises 6.25 - Total 337.50 337.50 Required:A. Calculate the value of the rate sensitive assets, rate sensitive liabilities and therepricing gap over the next year. B. Calculate the expected change in the net interest income for the bank if interestrates rise by 1 percent on both rate sensitive…
Consider the following balance sheet for ABC Company (in millions): Liabilities and Equity 1-year fixed deposits (interest-rate 6% annually) 3-year fixed deposits (interest-rate 7% annually) Equity Total liabilities & equity Assets Variable-rate mortgages $50 $70 (interest-rate 10% annually) 30-year fixed-rate loans (interest-rate 7% annually) $20 $10 $100 $50 Total assets $100 What is the expected net interest income if interest rates on Rate Sensitive Assets (RSAS) increase by 2 percent but interest rates on Rate Sensitive Liabilities (RSLS) increase by 1 percent?
Consider the following Balance Sheet for Forward Thinking Commercial Bank(FTCB) (in millions) ASSETS LIABILITIES Floating rate mortgages 250 Demand deposits 300 (currently 14% annually) (currently 5% annually) 30 years fixed rate loans 1 year CD 50 (currently 9% annually) 120 (currently 8% annually) Equity 20 370 370 a. What is FTCB expected net interest income (NII) at year end? b. What is FTCB expected net interest income at year end if interest rates fell by seven percent (7%). c. What is FTCB expected net interest income at year end if interest rates grew by 300 basis points on assets, but decline by 2% on liabilities.
Use 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%
Consider the following Balance Sheet for Cutting Edge Commercial Bank(CECB) (in millions) ASSETS LIABILITIES Floating rate mortgages 120 Demand deposits 110 (currently 14% annually) (currently 5% annually) 30 years fixed rate loans 1 year CD 50 (currently 9% annually) 80 (currently 8% annually) Equity 40 200 200 1. What is CECB expected net interest income (NII) at year-end? 2. What is CECB expected net interest income at year end if interest rates fell by seven percent (7%). 3. What is CECB expected net interest income at year end if interest rates grew by 300 basis points on assets, but decline by 2% on liabilities.
Assume a bank has the following (very simplified) balance sheet. 1)Assets Mortgages Fixed rate, 15 year, annual payments, both the coupon rate and yield-to-maturity are 8% Floating rate, 15 year, rate: LIBOR + 2%, (duration = 0) 2)Liabilities Overnight deposits, rate: 0.6%, (duration = 0) 2 year CD, rate: 2%, assume it is a zero coupon 3 year CD, rate: 4%, assume it is a zero coupon 3) Assignment: Calculate weights which will immunize the portfolio. Note this is a set of weights, there is not one unique solution. You don't have to calculate the full set, just some set of weights which immunizes the portfolio. Now say you can only invest 50% of your assets in floating rate mortgages. What is the minimum amount of interest rate risk you can have? What will happen to the value of your portfolio if interest rates increase by 1%?
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…
5. Which of the following bank accounts has the highest effective annual return (EAR)? a. An account that pays 8% nominal interest with monthly compounding. b. An account that pays 8% nominal interest with annual compounding. c. An account that pays 7% nominal interest with daily (365-day) compounding. d. An account that pays 7% nominal interest with monthly compounding. 6. Which of the following statements regarding a 30-year monthly payment amortized mortgage with a fixed nominal interest rate of 10% is CORRECT? a. The monthly payments will increase over time. b. A larger proportion of the first monthly payment will be interest, and a smaller proportion will be principal, than for the last monthly payment. c. The total dollar amount of interest being paid off each month gets larger as the loan approaches maturity. d. The amount representing interest in the first payment would be higher if the nominal interest rate were 7% rather than 10%. 7. What is the present value of the following…
Finding the Interest Rate: Concept Connection Example 6-3 (page 237) 18. What interest rates are implied by the following lending arrangements? a. You borrow $500 and repay $555 in one year. b. You lend $1,850 and are repaid $2,078.66 in two years. c. You lend $750 and are repaid $1,114.46 in five years with quarterly compounding. d. You borrow $12,500 and repay $21,364.24 in three years under monthly compounding. (Note. In parts c and d, be sure to give your answer as the annual nominal rate.) Lasher, William R.. Practical Financial Management (Page 276). South-Western College Pub. Kindle Edition.

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