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In: Finance

. Consider the following balance sheet positions for a financial institution: (1) Rate-sensitive assets = $500...

. Consider the following balance sheet positions for a financial institution:

(1) Rate-sensitive assets = $500 million. Rate-sensitive liabilities = $300 million

(2) Rate-sensitive assets = $200 million. Rate-sensitive liabilities = $350 million

(3) Rate-sensitive assets = $270 million. Rate-sensitive liabilities = $250 million

a) Calculate the repricing gap and the impact on NII of a 2 percent decrease in interest rates.

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b) Calculate the repricing gap and impact on NII assuming a 3 percent increase in interest rates.

c) What conclusion can you draw about the repricing model from these results?

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