Use the balance sheet of a bank below to answer the following. The duration of asset...
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Use the balance sheet of a bank below to answer the following. The duration of asset is 1.5 years, the duration of liabilities 2 years. Assets Liabilities Required Reserves 8 m Money Market Deposits 50 m Excess Reserves 7 m 3-year CDs 60 m T-bills 85 m Capital 10 m Commercial paper 5m Mortgages 15m What is the change in this bank's net income if the interest drops by 1%? goes up by $400,000 goes down by $1 million O goes down by $400,000 goes up by 20% Use the balance sheet of a bank below to answer the following. The duration of asset is 1.5 years, the duration of liabilities 2 years. Assets Liabilities Required Reserves 8 m Money Market Deposits 50 m Excess Reserves 7 m 3-year CDs 60 m T-bills 85 m Capital 10 m Commercial paper 5m Mortgages 15m What is the change in this bank's net income if the interest drops by 1%? goes up by $400,000 goes down by $1 million O goes down by $400,000 goes up by 20%
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