a. Consider the following FI balance sheet (in millions): Assets Liabilities Liquid assets $20 Deposits $1,800...

 

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a. Consider the following FI balance sheet (in millions): Assets Liabilities Liquid assets $20 Deposits $1,800 Loans 2,550 Property 330 Interbank borrowings Equity ? 150 Questions a. If stable core deposits are only 90 percent of current total deposits, what is the Fl's financing gap? b. What is financing requirement of the FI? How much interbank borrowings are required? 2. Sun Bank USA purchased a 16 million one-year deutsche mark loan that pays 12 percent interest annually. The spot rate for deutsche marks is DM1.60/$. Sun Bank has funded this oan by accepting a British pound (BP)-denominated deposit for the equivalent amount and maturity at an annual rate of 10 percent. The current spot rate of the British pound is $1.60/. Questions a. What is the net interest income earned in dollars on this one-year transaction if the spot rates at the end of the year are DM1.70/$ and $1.85/? b. What is the total income earned on this transaction given the end-of-year spot rates in part (a)? a. Consider the following FI balance sheet (in millions): Assets Liabilities Liquid assets $20 Deposits $1,800 Loans 2,550 Property 330 Interbank borrowings Equity ? 150 Questions a. If stable core deposits are only 90 percent of current total deposits, what is the Fl's financing gap? b. What is financing requirement of the FI? How much interbank borrowings are required? 2. Sun Bank USA purchased a 16 million one-year deutsche mark loan that pays 12 percent interest annually. The spot rate for deutsche marks is DM1.60/$. Sun Bank has funded this oan by accepting a British pound (BP)-denominated deposit for the equivalent amount and maturity at an annual rate of 10 percent. The current spot rate of the British pound is $1.60/. Questions a. What is the net interest income earned in dollars on this one-year transaction if the spot rates at the end of the year are DM1.70/$ and $1.85/? b. What is the total income earned on this transaction given the end-of-year spot rates in part (a)?

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Here are the solutions to the questions 1a Stable core deposits 90 of 1800 million 1620 million Fina... View the full answer