The Tropical State Bank has $1,000 in total assets (all of which are earning assets), $700 of which will be repriced within the next 90 days. This bank also has $800 in total liabilities, $400 of which will be repriced within the next 90 days. Currently, the bank is earning 8 percent on its assets and is paying 5 percent on its liabilities. If interest rates do not change in the next 90 days, what is this bank's net interest margin? 8 percent 5 percent 4 percent 4 percent
The Tropical State Bank has $1,000 in total assets (all of which are earning assets), $700 of which will be repriced within the next 90 days. This bank also has $800 in total liabilities,
$400 of which will be repriced within the next 90 days. Currently, the bank is earning 8 percent on its assets and is paying 5 percent on its liabilities.
If interest rates do not change in the next 90 days, what is this bank's net interest margin?
- 8 percent
- 5 percent
- 4 percent
- 4 percent
The Tropical State Bank has $1,000 in total assets (all of which are earning assets), $700 of which will be repriced within the next 90 days. This bank also has $800 in total liabilities,
$400 of which will be repriced within the next 90 days. Currently, the bank is earning 8 percent on its assets and is paying 5 percent on its liabilities.
If interest rates on both assets and liabilities rise by 2 percent in the next 90 days, what would be the bank's net interest margin?
- 4 percent
- 4 percent
- 6 percent
- 4 percent
A financial institution with a negative gap can reduce the risk of loss due to changing interest rates by:
- extending asset
- increasing short-term interest-sensitive
- using financial futures or options
- All of the options are correct
If a bank that is asset sensitive can hedge its interest-rate risk by which of the following activities?
- Reducing maturities of its assets
- Reducing maturities of its liabilities
- Using a long hedge
- All of the options are correct
A bank wishing to avoid higher borrowing costs is most likely to use:
- a short position or selling hedge in
- a long position or buying hedge in
- a long position in call option on futures
- a long position or buying hedge in futures and a long position in call option on futures contracts.
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