Homework Answers
33)
As interest rate sensitive deposits > interest rate sensitive loans for Hawkeye national bank, the bank is liability sensitive as deposits are a liability to the bank.
Answer is b) Liability Sensitive
34)
If interest rates are expected to fall, Hawkeys net interest income would rise as they are more liability sensitive than asset sensitive. This would creaste larger imapct on deposits than loans in the form of lower interest needed to be padi to depositors.
Answer is a) Increase
35)
Asset utlization measures how effectively the bank is utilizing its assets. Typically it measure managerial efficiency in generating operating revenue and controlling its operating expenses.
Answer is b) Portfolio management , the mix and yield on assets
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Please answer 33-35
33. Hawkeye National Bank has $27,865,987 in interest-rate-sensitive loans. They also have $32,544,375...
in terms of interest rate hedging, a liability sensitive bank means that the bank... In terms of interest rate hedging, a liability sensitive bank means that the bank has more interest sensitive d...
in terms of interest rate hedging, a liability sensitive bank
means that the bank...
In terms of interest rate hedging, a liability sensitive bank means that the bank has more interest sensitive deposits (and perhaps other liabilities) than rate sensitive assets in the particular planning period. B. i. True False, it actually has more rate sensitive derivatives than assets False, it means that its deposit customers are particularly sensitive and can take out their deposits any time None of the...
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...
Question 1- Please choose the correct answer inside the bracket and copy it to your answer...
Question 1- Please choose the correct answer inside the bracket and copy it to your answer sheets (12 Marks) a. Given a bank's return on assets, the higher the bank capital, the (higher/lower) the return for the owners of the bank b. Greater flexibility in liability management has allowed banks to (increase/decrease) the proportion of their assets held in loans. C. In the absence of regulation, banks would probably hold too little capital, (increasing/ decreasing) the return on equity. d....
(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...
Consider a bank with the following income statement: It has $100 in loans with an interest...
Consider a bank with the following income statement: It has $100 in loans with an interest rate of 5 percent; $50 in security holdings, paying 10 percent; noninterest income of $10; $100 in savings accounts that have an interest rate of 2.5 percent; and other expenses of $15. How much profit does this bank make? A) –$5 B) $2.50 C) $35 D) $20 Which of the following is a “core deposit”? A) checking deposits B) savings deposits C) small-time deposits...
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...
Valley Bank has an average interest rate of 10% on %500 million of loans and securities,...
Valley Bank has an average interest rate of 10% on %500 million of loans and securities, an average interest rate of 5% on $400 million of deposits and other borrowed funds, noninterest revenue of $12 million, noninterest expense of $17 million, and a provision for loan losses of $10 million. total shareholders equity is $50 million, total assets are $500 million and the tax rate is 30%. Prepare Valley's income statement in order to answer: A. the net interest income...
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 solve question 4 and 5 4. A bank has the following balance sheet: Assets Rate...
please solve question 4 and 5
4. A bank has the following balance sheet: Assets Rate sensitive Fixed rate Nonearning Total Avg. Rate 7.75% 8.75 Avg Rate 6.25% 7.50 $550,000 955,000 565,000 $2,070,000 Liabilities/Equity Rate sensitive $375,000 Fixed rate 805,000 Nonpaying 890,000 Total $2,070,000 ise 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, gap to total assets...
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...
in terms of interest rate hedging, a liability sensitive bank
means that the bank...
In terms of interest rate hedging, a liability sensitive bank means that the bank has more interest sensitive deposits (and perhaps other liabilities) than rate sensitive assets in the particular planning period. B. i. True False, it actually has more rate sensitive derivatives than assets False, it means that its deposit customers are particularly sensitive and can take out their deposits any time None of the...
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...
Question 1- Please choose the correct answer inside the bracket and copy it to your answer sheets (12 Marks) a. Given a bank's return on assets, the higher the bank capital, the (higher/lower) the return for the owners of the bank b. Greater flexibility in liability management has allowed banks to (increase/decrease) the proportion of their assets held in loans. C. In the absence of regulation, banks would probably hold too little capital, (increasing/ decreasing) the return on equity. d....
(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...
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...
please solve question 4 and 5
4. A bank has the following balance sheet: Assets Rate sensitive Fixed rate Nonearning Total Avg. Rate 7.75% 8.75 Avg Rate 6.25% 7.50 $550,000 955,000 565,000 $2,070,000 Liabilities/Equity Rate sensitive $375,000 Fixed rate 805,000 Nonpaying 890,000 Total $2,070,000 ise 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, gap to total assets...
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...
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