7. If you are given the following information for HSBC: Assets Cash $125 million Floating Rate...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
7. If you are given the following information for HSBC: Assets Cash $125 million Floating Rate Loan (10% interest) $100 million Fixed Rate Loan (8% interest) $50 million Total asset $275 million A. Calculate the HSBC's net interest income. Liabilities and equity Interest-bearing deposits (5% interest) $150 million CD (4% interest) $120 million Equity $5 million Total liabilities and equity $275 million B. What is the new net interest income if interest rates fall by 2%? C. Assume that when the market interest rates fall by 2%, the fixed-rate loan would have a value of $48 million. What would be the value of equity? D. Using the cumulative gap model, calculate the new net interest income if interest rates fall by 3% and increase by 3% at the end of year 1. 7. If you are given the following information for HSBC: Assets Cash $125 million Floating Rate Loan (10% interest) $100 million Fixed Rate Loan (8% interest) $50 million Total asset $275 million A. Calculate the HSBC's net interest income. Liabilities and equity Interest-bearing deposits (5% interest) $150 million CD (4% interest) $120 million Equity $5 million Total liabilities and equity $275 million B. What is the new net interest income if interest rates fall by 2%? C. Assume that when the market interest rates fall by 2%, the fixed-rate loan would have a value of $48 million. What would be the value of equity? D. Using the cumulative gap model, calculate the new net interest income if interest rates fall by 3% and increase by 3% at the end of year 1.
Expert Answer:
Answer rating: 100% (QA)
A To calculate HSBCs net interest income we need to determine the interest income and interest expense Interest income Interestbearing deposits 150 mi... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
Students also viewed these finance questions
-
Ques 1: What is the major complaint by firms concerning the Sarbanes-Oxley act of 2012? A. the legislative maximum allowable compensation for a CEO. B. the legal requirement to disclose project...
-
List three specific parts of the Case Guide, Objectives and Strategy Section (See below) that you had the most difficulty understanding. Describe your current understanding of these parts. Provide...
-
You are given the following information for the commodity market, in which taxes, planned investment, government spending on goods and services, and net exports are autonomous, but consumption and...
-
1. Based on a simple, constant context, you will arrive at a stationary state for a unregulated, and then a regulated system. Assume that air resistance and friction for a car increase in the power...
-
Determine the force in member GC of the truss and state if this member is in tension or compression. Units Used: kip = 103 lb Given: F1 = 1000 lb F2 = 1000 lb F3 = 1000 lb F4 = 1000 lb a = 10 ft =...
-
In the system shown in Fig. 1.57 the masses of the bodies are known to be ml and m2, the coefficient of friction between the body m1 and the horizontal plane is equal to k, and a pulley of mass m is...
-
What must the respondent do to oppose a motion?
-
A bank is thinking of using economic value added to identify services that require improvement or elimination. What problems may the bank have in computing the economic value added of any of the...
-
Please compute for the following requirements and show solution in good accounting form so I can compare it with my own answer. Thank you! 1. Uncle Ben Corp. sells a product for P5 per unit. The...
-
You are required to submit a report that explains with a sufficient level of detail how the results are obtained. Also, you need to submit your codes (if any). Everything should be submitted on BB in...
-
ADJUSTMENTS a.) A count of supplies reveals $300 were on hand on June 30. b.) The $28,000 insurance policy was purchased on March 1, 2017 for whole year. March April May June c.) The computers were...
-
What is the present value of a $1,300 payment made in five years when the discount rate is 10 percent? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value
-
Calculate the two-sided 95% confidence interval for the population standard deviation (sigma) given that a sample of size n=5 yields a sample standard deviation of 18.45. Your answer: 0.99 < sigma <...
-
What is the daily revenue? What is the staffing level? What would be the profits per hour? How many defects would there be in one million units? To what level would they have to reduce the standard...
-
Bell Inc.'s tax rate was 25% last year. Last year, the company realized $1,500,000 in operating income (EBIT). Its annual interest expense is $1,000,000. What was the company's net income for the...
-
Presented below are long-term liability items for Ivanhoe Company at December 31, 2022. Bonds payable, due 2024 $625,000 Lease liability 80,000 Notes payable, due 2027 90,000 Discount on bonds...
-
David's Auto Supply The balances as of June 1 for the accounts receivable subsidiary ledger are Graham Carter, $600; J. Sanders, $500; and R. Victor, $800. Other balances on June 1 are Accounts...
-
Chris Zulliger was a chef at the Plaza Restaurant in the Snowbird Ski Resort in Utah. The restaurant is located at the base of a mountain. As a chef for the Plaza, Zulliger was instructed by his...
-
Refer to the financial statement data for Hasbro in Problem 4.24 in Chapter 4. Exhibit 5.14 presents risk ratios for Hasbro for Year 2 and Year 3. Problem 4.24 Calculating and Interpreting...
-
Exhibit 4.22 presents selected operating data for three retailers for a recent year. Macy??s operates several department store chains selling consumer products such as brand-name clothing, china,...
-
The chapter describes valuation using free cash flows for all debt and equity stakeholders as well as free cash flows for equity shareholders. For each approach, give one example of valuation...
-
Write down the structure of a three-dimensional VARMA model if the vector time series has the following three components: \(\operatorname{SCM}(0,0), \operatorname{SCM}(0,1)\), and...
-
Consider the three SCMs of Question 3. If the maximum elements, in absolute value, of the three rows of the transformation matrix \(T\) are \((1,1),(2,3)\), and \((3,2)\), respectively. Write down...
-
Consider the realized volatilities of the Alcoa stock from January 2, 2003, to May 7, 2004, for 340 observations. The realized volatilities are the sum of squares of intraday \(m\)-minute log...
Study smarter with the SolutionInn App