Question: In a simple example, a bank a $20 million, 5 year fixed rate loan at 5%. In order to fund this, the bank offers $20

In a simple example, a bank a $20 million, 5 year fixed rate loan at 5%. In order to fund this, the bank offers $20 million in 1 year Certificate of Deposit at 2%. The initial spread is 3%. If the interest Rates increase during the first 18 months, deposits would reprice first and will the spread then Increase or Decrease?

		Increase
		Decrease

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