Homework Answers
1: The association is Asset sensitive since it has higher interest sensitive assets than liabilities.
2: Net Interest income will arise when there is an increase in interest rates. This will enable the association to earn more in interest on assets that pay more in interest on liabilities.
3: Net Interest loss will arise when there is a decrease in interest rates. This will result in higher loss of interest income on assets than savings on interest payment on liabilities.
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is
it asset sensitive or liability sensitive?
under what scenario for market
interest rates will sparkle...
In a rising market interest rate environment, bank management's most likely action will be to: a....
In a rising market interest rate environment, bank management's most likely action will be to: a. Decrease interest-sensitive assets. b. Increase interest-sensitive liabilities. c. Increase interest-sensitive assets. d. Have a higher negative relative IS gap. 2. A bank that is liability-sensitive will have: a. A positive impact on net interest income if interest rates fall. b. A negative impact on net interest income if interest rates rise. c. A positive impact on net interest income if interest rates rise. d....
Rate-Sensitive Bank Assets Liabilities $5 Variable-rate Loans Short-term Loans Short-term Securities Reserves Variable-rate CDs Money Market...
Rate-Sensitive Bank Assets Liabilities $5 Variable-rate Loans Short-term Loans Short-term Securities Reserves Variable-rate CDs Money Market Deposit Accounts Checkable Deposits Savings Deposits Long-term CDs Equity Capital Long-term Loans Long-term Securities 30 30 Referring to the table above, and using basic gap analysis, this bank's "gap" is $ million. (Round your response to the nearest whole number.) Referring to the table above, if interest rates suddenly increase by two percentage points, then the bank's profits change by $ whole number.) (Round...
(6 points) 3. The bank you own has the following balance sheet Liabilities with current interest rate Assets with...
(6 points) 3. The bank you own has the following balance sheet Liabilities with current interest rate Assets with current interest rate $5million $20 million Variable: 1% Checking Fixed: 0% Reserves deposits Savings Deposits $25 million Fixed: 2% $10 million Variable: 2% Government Securities Variable: 3 % $10 million Money Market Deposit Accounts $35 million Fixed: 6% Mortgage Loans Bank Capital To be To be $10 million Variable: 7% Short-Term determined determined Loans Business $20 million Fixed: 9% Loans $80...
For Question 2-5 Assets Yleld Liability Cost Rate sensitive 1000 5% 800 2% Flx rate 2000...
For Question 2-5 Assets Yleld Liability Cost Rate sensitive 1000 5% 800 2% Flx rate 2000 7% 1800 6% Not earning 1000 2600 Shareholder Equity 1400 Total 2. Find out Net Interest Income, Net Interest Margin, and GAP? 4000 4000 If yield curve moves parallel and interest rate increase by 2 percent, what happens to net interest income, net interest margins and GAP (decrease or increase by how much for each)? Why? if Interest rate for assets increases by 1...
4. The managers of Bay View Bank asks for a performance/risk analysis, and asks you to...
4. The managers of Bay View Bank asks for a performance/risk analysis, and asks you to answer the following questions. The Bay View Bank's balance sheet is as follows: Assets: Securities Long-term Loans 5% rate $200 million S 800 million $1000 million Ave. Duration 2 vear 5 years 2% rate Total Assets Liabilities & Equity Short-term Deposits.% rate Certificates of eposit 2% rate $500 million 400 million S900 million 1 year 2 vear Total Liabilities Equity Total Liab Equity 1000...
Suppose the First National Bank of Duluth has $500.00 million in total assets with an average asset duration of five years. Assume that the bank’s liabilities are comprised of $86.75 million of demand...
Suppose the First National Bank of Duluth has $500.00 million in total assets with an average asset duration of five years. Assume that the bank’s liabilities are comprised of $86.75 million of demand deposits and $163.75 million in bonds with a 4.00% coupon rate (which pays annually) and a five year time-to-maturity. Further assume that current market interest rates are at 9.00% per annum. What is this bank’s duration gap? Is the bank asset- or liability-sensitive?
Please show calculation A bank has the following asset and liability portfolios. What is the gap?...
Please show calculation
A bank has the following asset and liability portfolios. What is the gap? Rate-Sensitive Floating-rate Amount Rate-Sensitive Amount Assets (in millions) Liabilities (in millions) $4,000 NOW accounts $1,750 oans Floating-rate mortgages 1,000 MMDAs 4,500 Short-term Treasury securities 1.500Short-term CDs 1.000 $6,500 $7,250 A) $750 million B)-$750 million C) 1.12 D) 896 E) none of these
1) What is the bank's gap? 2) What is the bank’s expected NII if interest rates...
1) What is the bank's gap?
2) What is the bank’s expected NII if interest rates and portfolio
composition remain constant during the year?
3) True or False: This bank is positioned to profit if rates
decrease.
Use the following table to answer the remaining questions. Assets Amount ($M) Rate Liabilities & Equity Amount ($M) Ra Rate Sensitive 600 3% Rate Sensitive Fixed Rate 150 4% Fixed Rate 2% Nonearning 50 Nonpaying liabilities & equity Total 800 Total
20. A bank has the following balance sheet: Assets Rate sensitive $225,000 Fixed rate 550.000 Nonearning...
20. A bank has the following balance sheet: Assets Rate sensitive $225,000 Fixed rate 550.000 Nonearning 120,000 $895,000 Avg. Rate 6.35% 7.55 Liabilities/Equity Rate sensitive $300,000 Fixed rate 505,000 Nonpaying 90,000 Total $895,000 Avg. Rate 4.25% 6.15 Total Suppose interest rates rise such that the average yield on rate-sensitive assets increases by 45 basis points and the average yield on rate-sensitive liabilities increases by 35 basis points. a. Calculate the bank's repricing GAP. b. Assuming the bank does not change...
Interest Liabilities Costs Assets Yield Rates Rate-sensitive 500 6.0% 600 2.0% Fixed-rate 350 9.0% 220 4.0%...
Interest Liabilities Costs Assets Yield Rates Rate-sensitive 500 6.0% 600 2.0% Fixed-rate 350 9.0% 220 4.0% Non-earning/Non-paying 150 0.0% 100 0.0% Total 920 Equity 80 Total 1,000 1,000 [i] Calculate the amount of interest income, interest expense, and net interest income generated by the balance sheet structure of Wales Bank. Report the bank's net interest margin.
In a rising market interest rate environment, bank management's most likely action will be to: a. Decrease interest-sensitive assets. b. Increase interest-sensitive liabilities. c. Increase interest-sensitive assets. d. Have a higher negative relative IS gap. 2. A bank that is liability-sensitive will have: a. A positive impact on net interest income if interest rates fall. b. A negative impact on net interest income if interest rates rise. c. A positive impact on net interest income if interest rates rise. d....
Rate-Sensitive Bank Assets Liabilities $5 Variable-rate Loans Short-term Loans Short-term Securities Reserves Variable-rate CDs Money Market Deposit Accounts Checkable Deposits Savings Deposits Long-term CDs Equity Capital Long-term Loans Long-term Securities 30 30 Referring to the table above, and using basic gap analysis, this bank's "gap" is $ million. (Round your response to the nearest whole number.) Referring to the table above, if interest rates suddenly increase by two percentage points, then the bank's profits change by $ whole number.) (Round...
(6 points) 3. The bank you own has the following balance sheet Liabilities with current interest rate Assets with current interest rate $5million $20 million Variable: 1% Checking Fixed: 0% Reserves deposits Savings Deposits $25 million Fixed: 2% $10 million Variable: 2% Government Securities Variable: 3 % $10 million Money Market Deposit Accounts $35 million Fixed: 6% Mortgage Loans Bank Capital To be To be $10 million Variable: 7% Short-Term determined determined Loans Business $20 million Fixed: 9% Loans $80...
For Question 2-5 Assets Yleld Liability Cost Rate sensitive 1000 5% 800 2% Flx rate 2000 7% 1800 6% Not earning 1000 2600 Shareholder Equity 1400 Total 2. Find out Net Interest Income, Net Interest Margin, and GAP? 4000 4000 If yield curve moves parallel and interest rate increase by 2 percent, what happens to net interest income, net interest margins and GAP (decrease or increase by how much for each)? Why? if Interest rate for assets increases by 1...
4. The managers of Bay View Bank asks for a performance/risk analysis, and asks you to answer the following questions. The Bay View Bank's balance sheet is as follows: Assets: Securities Long-term Loans 5% rate $200 million S 800 million $1000 million Ave. Duration 2 vear 5 years 2% rate Total Assets Liabilities & Equity Short-term Deposits.% rate Certificates of eposit 2% rate $500 million 400 million S900 million 1 year 2 vear Total Liabilities Equity Total Liab Equity 1000...
Please show calculation
A bank has the following asset and liability portfolios. What is the gap? Rate-Sensitive Floating-rate Amount Rate-Sensitive Amount Assets (in millions) Liabilities (in millions) $4,000 NOW accounts $1,750 oans Floating-rate mortgages 1,000 MMDAs 4,500 Short-term Treasury securities 1.500Short-term CDs 1.000 $6,500 $7,250 A) $750 million B)-$750 million C) 1.12 D) 896 E) none of these
1) What is the bank's gap?
2) What is the bank’s expected NII if interest rates and portfolio
composition remain constant during the year?
3) True or False: This bank is positioned to profit if rates
decrease.
Use the following table to answer the remaining questions. Assets Amount ($M) Rate Liabilities & Equity Amount ($M) Ra Rate Sensitive 600 3% Rate Sensitive Fixed Rate 150 4% Fixed Rate 2% Nonearning 50 Nonpaying liabilities & equity Total 800 Total
20. A bank has the following balance sheet: Assets Rate sensitive $225,000 Fixed rate 550.000 Nonearning 120,000 $895,000 Avg. Rate 6.35% 7.55 Liabilities/Equity Rate sensitive $300,000 Fixed rate 505,000 Nonpaying 90,000 Total $895,000 Avg. Rate 4.25% 6.15 Total Suppose interest rates rise such that the average yield on rate-sensitive assets increases by 45 basis points and the average yield on rate-sensitive liabilities increases by 35 basis points. a. Calculate the bank's repricing GAP. b. Assuming the bank does not change...
Interest Liabilities Costs Assets Yield Rates Rate-sensitive 500 6.0% 600 2.0% Fixed-rate 350 9.0% 220 4.0% Non-earning/Non-paying 150 0.0% 100 0.0% Total 920 Equity 80 Total 1,000 1,000 [i] Calculate the amount of interest income, interest expense, and net interest income generated by the balance sheet structure of Wales Bank. Report the bank's net interest margin.
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