The following information is for Rainbow National Bank: Report of Income $ Interest income 2,250.00 Interest expense 1,500.00 Total assets 45,000.00 Securities losses or gains 21.00 Earning assets 40,000.00 Total liabilities 38,000.00 Taxes paid 16.00 Shares of common stock outstanding 5,000 Noninterest income 800.00 Noninterest expense 900.00 Provision for loan losses 250.00 Please calculate: ROE --------- ROA --------- Net interest margin --------- Earnings per share --------- Net noninterest margin --------- Net operating margin --------- Alternative Scenarios: Suppose interest income, interest expenses, noninterest income, and noninterest expenses each increase by 3 percent while all other revenue and expense items shown in the preceding table remain unchanged. What will happen to Rainbow ROE, ROA, and earnings per share? On the other hand, suppose Rainbow interest income and expenses as well as its noninterest income and expenses decline by 3 percent, again with all other factors held constant. How would the bank’s ROE, ROA, and per-share earnings change?
The following information is for Rainbow National Bank: Report of Income $ Interest income 2,250.00 Interest expense 1,500.00 Total assets 45,000.00 Securities losses or gains 21.00 Earning assets 40,000.00 Total liabilities 38,000.00 Taxes paid 16.00 Shares of common stock outstanding 5,000 Noninterest income 800.00 Noninterest expense 900.00 Provision for loan losses 250.00 Please calculate: ROE --------- ROA --------- Net interest margin --------- Earnings per share --------- Net noninterest margin --------- Net operating margin --------- Alternative Scenarios: Suppose interest income, interest expenses, noninterest income, and noninterest expenses each increase by 3 percent while all other revenue and expense items shown in the preceding table remain unchanged. What will happen to Rainbow ROE, ROA, and earnings per share? On the other hand, suppose Rainbow interest income and expenses as well as its noninterest income and expenses decline by 3 percent, again with all other factors held constant. How would the bank’s ROE, ROA, and per-share earnings change?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
The following information is for Rainbow National Bank:
|
Report of Income |
$ |
|
Interest income |
2,250.00 |
|
Interest expense |
1,500.00 |
|
Total assets |
45,000.00 |
|
Securities losses or gains |
21.00 |
|
Earning assets |
40,000.00 |
|
Total liabilities |
38,000.00 |
|
Taxes paid |
16.00 |
|
Shares of common stock outstanding |
5,000 |
|
Noninterest income |
800.00 |
|
Noninterest expense |
900.00 |
|
Provision for loan losses |
250.00 |
Please calculate:
Net interest margin ---------
Earnings per share ---------
Net noninterest margin ---------
Net operating margin ---------
Alternative Scenarios:
- Suppose interest income, interest expenses, noninterest income, and noninterest expenses each increase by 3 percent while all other revenue and expense items shown in the preceding table remain unchanged. What will happen to Rainbow ROE, ROA, and earnings per share?
- On the other hand, suppose Rainbow interest income and expenses as well as its noninterest income and expenses decline by 3 percent, again with all other factors held constant. How would the bank’s ROE, ROA, and per-share earnings change?
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