Consider the following balance sheet for Watchover Savings Incorporated (in millions): Assets Floating-rate mortgages (currently 11%...

 

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Consider the following balance sheet for Watchover Savings Incorporated (in millions): Assets Floating-rate mortgages (currently 11% per annum) 30-year fixed-rate loans (currently 8% per annum) Total a. What is Watchover's expected net interest income at year-end? (Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16)) b. What will be the net interest income at year-end if interest rates rise by 2 percent? (Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16)) c. Using the one-year cumulative repricing gap model, what is the change in the expected net interest income for a 2 percent increase in interest rates? (Negative amount should be indicated by a minus sign. Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16)) a. b. G. Net interest income Net interest income Change in net interest income million milion milion $98 109 Liabilities and Equity Now deposits (currently 74 per annum) 5-year time deposits (currently 74 per annum) Equity Total $ 207 $ 124 36 47 $ 207 Consider the following balance sheet for Watchover Savings Incorporated (in millions): Assets Floating-rate mortgages (currently 11% per annum) 30-year fixed-rate loans (currently 8% per annum) Total a. What is Watchover's expected net interest income at year-end? (Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16)) b. What will be the net interest income at year-end if interest rates rise by 2 percent? (Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16)) c. Using the one-year cumulative repricing gap model, what is the change in the expected net interest income for a 2 percent increase in interest rates? (Negative amount should be indicated by a minus sign. Enter your answer in millions rounded to 2 decimal places. (e.g., 32.16)) a. b. G. Net interest income Net interest income Change in net interest income million milion milion $98 109 Liabilities and Equity Now deposits (currently 74 per annum) 5-year time deposits (currently 74 per annum) Equity Total $ 207 $ 124 36 47 $ 207

Answer rating: 100% (QA)

a Interest income 98 011 109 008 195 Interest expense 124 007 36 007 1120 Net interest incom... View the full answer