Suppose l-yeat Treasury Bill yield 1.5% and 10-year Treasury Note yield 2%. If the yield curve...

 

Transcribed Image Text:

Suppose l-yeat Treasury Bill yield 1.5% and 10-year Treasury Note yield 2%. If the yield curve steepens, so Bille now yield 1% and Notes now yield 2.5%, which bank should experience a gradual improvement in NII? Assume cach bank has a typical deposit profile. Bank R, with 80% of its lending in variable-tate, prime-baned business loans Bank Q. with 80% of its lending in fixed-rate residential mortgagen Suppose l-yeat Treasury Bill yield 1.5% and 10-year Treasury Note yield 2%. If the yield curve steepens, so Bille now yield 1% and Notes now yield 2.5%, which bank should experience a gradual improvement in NII? Assume cach bank has a typical deposit profile. Bank R, with 80% of its lending in variable-tate, prime-baned business loans Bank Q. with 80% of its lending in fixed-rate residential mortgagen

Answer rating: 100% (QA)

The correct answer is optionA Bank R with 80 of its lending in variab... View the full answer