A bank invested $50 million in a one-year asset paying 10 percent interest per year and...

A bank invested $50 million in a one-year asset paying 10 percent interest per year and simultaneously issued a $50 million, two-year liability paying 8 percent interest per year to pay for it. • Is the bank short funded or long funded? • What is the bank’s net interest income in year one • What will be the bank’s net interest income in year two if at the end of the first year all interest rates have decreased by 1.5 percent (150 basis points)?

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jeff jeffy answered 2 years ago

1. If a bank invested $67 million in a two-year asset paying 12 percent interest per...

1. If a bank invested $67 million in a two-year asset paying 12 percent interest per year and simultaneously issued a $67 million one-year liability paying 9 percent interest per year, what would be the impact on the bank’s net interest income if, at the end of the first year, all interest rates increased by 2 percentage point? (Input the amount as a positive value. Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places....

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Bank USA recently purchased $11.7 million worth of euro-denominated one-year CDs that pay 10 percent interest...

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Consider a 30-year U.S. bond paying 8 percent coupon. The interest is 10 percent. Find the...

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Bank USA recently purchased $10 million worth of euro- denominated one-year CDs that pay 10 percent...

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