1. Consider the following Balance Sheet for Total Caribbean Bank(TCB) (in millions) ASSETS LIABILITIES Floating rate...

1. Consider the following Balance Sheet for Total Caribbean Bank(TCB) (in millions)

ASSETS		LIABILITIES
Floating rate mortgages	120	Demand deposits	110
(currently 12% annually)		(currently 3% annually)
30 years fixed rate loans		1 year CD	50
(currently 7% annually)	80	(currently 6% annually)
		Equity	40

	200		200

a. What is TCB expected net interest income (NII) at year end? (1mark)

b. What is TCB expected net interest income at year end if interest rates grew by 500 basis points. (1 mark)

c. What is TCB expected net interest income at year end if interest rates fell by 200 basis points on assets and decline by 2% on liabilities.

Expert Solution

jeff jeffy answered 22 hours ago

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