A bank has the following assets $25 mm C&J loans interest rate = base rate = short-term treasury (currently 0%) + 1% credit spread $75mm of 30-year treasuries yielding 2% its liabilities are $10 million equity capital + $80 mm 1 year insured CDs playing 0% + $10 mm 2 years uninsured CD's paying 1%. The Fed announces an increase in short-term interest rates from zero to 5%. 

What is the change in the bank's net income?

Answer rating: 100% (QA)

To calculate the change in the banks net income we need to consider the impact of the interest rate ... View the full answer