Question: A Question 28 (10 points) Consider an FI that issues S100 million of liabilities with one year to maturity to finance the purchase of S100

A Question 28 (10 points) Consider an FI that issues S100 million of liabilities with one year to maturity to finance the purchase of S100 million of assets with a two year maturity. Suppose that the cost of funds (liabilities) for the FI is 5 percent per year and the interest return on the assets is 8 percent per year. The Fl's profit spread in year I is S % and dollar value of profit in year I is Format BIU IMI

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