7. If you are given the following information for HSBC: Assets Cash $125 million Floating Rate...

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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.

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