For Question 2-5 Rate sensitive Fix rate Not earning Assets 1000 2000 1000 Yield 5% 7%...

   

Transcribed Image Text:

For Question 2-5 Rate sensitive Fix rate Not earning Assets 1000 2000 1000 Yield 5% 7% Total 4000 2. Find out Net Interest Income, Net Interest Margin, and GAP? Liability 800 1800 2600 Cost Shareholder Equity 1400 4000 2% 6% If yield curve moves parallel and interest rate increase by 2 percent, what happens to net interest income, net interest margins and GAP (decrease or increase by how much for each)? Why? if Interest rate for assets increases by I percent and spread decrease by 1 percent, what happens to net interest income, net interest margins and GAP? (decrease or increase by how much for each) Why? Interest rate for assets increases by 3 percent, spread decrease by 1 percent, and rate sensitive assets and rate sensitive liability together increase by 100% what happens to net interest income, net interest margins and GAP? (decrees or increase by how much for each) Why? For Question 2-5 Rate sensitive Fix rate Not earning Assets 1000 2000 1000 Yield 5% 7% Total 4000 2. Find out Net Interest Income, Net Interest Margin, and GAP? Liability 800 1800 2600 Cost Shareholder Equity 1400 4000 2% 6% If yield curve moves parallel and interest rate increase by 2 percent, what happens to net interest income, net interest margins and GAP (decrease or increase by how much for each)? Why? if Interest rate for assets increases by I percent and spread decrease by 1 percent, what happens to net interest income, net interest margins and GAP? (decrease or increase by how much for each) Why? Interest rate for assets increases by 3 percent, spread decrease by 1 percent, and rate sensitive assets and rate sensitive liability together increase by 100% what happens to net interest income, net interest margins and GAP? (decrees or increase by how much for each) Why?

Answer rating: 100% (QA)

SOLUTION Question 2 2 Find out Net Interest Income Net Interest Margin and GAP To find the net interest income we need to subtract the interest expense on liabilities from the interest income on asset... View the full answer