Consider the following capital account of a bank. Assets: 1. Rate sensitive assets $160,000 2. Fixed rate

Question:

Consider the following capital account of a bank.
Assets: 1. Rate sensitive assets $160,000
2. Fixed rate assets $260,000
Liabilities: 1. Rate sensitive liabilities $200,000
2. Fixed rate liabilities $250,000
Suppose that the interest rate falls from 5% to 4.5%. Calculate the increase in the profits for the bank, as a result