Peoples’ Savings Bank, a thrift institution, has a cumulative gap for the coming year of +$145...

Peoples’ Savings Bank, a thrift institution, has a cumulative gap for the coming year of +$145 million and interest rates are expected to fall by 3.5 percentage points.

(1) What is the expected change in net interest income that this thrift institution might experience?

(2) What change will occur in net interest income if interest rates rise by 1.5 percentage points?

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago

Assume that the audit for National Australia Bank Limited (NAB), a financial institution, will be coming...

Assume that the audit for National Australia Bank Limited (NAB), a financial institution, will be coming up for tender. You and your colleagues are required to prepare a client evaluation report based on your research for the senior members of your auditing firm. Your report should provide preliminary information as to whether the auditing firm should consider tendering for the audit of NAB. You should conduct extensive research and perform an analysis of the annual report of National Australia Bank...

Discuss the differences between commercial Bank and Savings institution based on the following aspects: 1) Key...

Discuss the differences between commercial Bank and Savings institution based on the following aspects: 1) Key balance sheet characteristics; 2) Industry performance; (7.5 marks) 3) Regulation burden. (7.5 marks)

A savings institution (SI) has funded $12 million of 30-year fixed-rate mortgages with an average interest...

A savings institution (SI) has funded $12 million of 30-year fixed-rate mortgages with an average interest rate of 5.75 percent. These assets are funded with time deposits with an average maturity of six months. The deposits are currently paying 3.5 percent. In six months time, however, the Fed has raised interest rates twice and the depositors now must be paid 4.25 percent. What will happen to the SI's ROA and NIM? How would your answer change if the SI normally...

If a bank has a _ gap, its net interest margin will be affected by...

If a bank has a ___________ gap, its net interest margin will be __________ affected by an increase in interest rates -negative, positive -negative, adversely -positive, adversely -zero positive the duration of a zero-coupon bond will be _______ the duration of a couple bond with the same yield, maturity and other characteristics. - lower than - higher than -equal to -more information is needed

Your firm has an average receipt size of $145. A bank has approached you concerning a...

Your firm has an average receipt size of $145. A bank has approached you concerning a lockbox service that will decrease your total collection time by one day. You typically receive 7,100 checks per day. The daily interest rate is .017 percent. The bank charges a lockbox fee of $135 per day. What is the NPV of accepting the lockbox agreement? What would the net annual savings be if the service were adopted?

Erica has her savings in a bank account that pays 4.0% interest per year. She is...

Erica has her savings in a bank account that pays 4.0% interest per year. She is considering buying stock in a pharmaceuticals company that is developing a cure for cellulite. Her research indicates that she could earn 45% in one year if the cure is successful or lose 65% in one year if it is not. At what probability of success would the pharmaceuticals stock be the better choice? (Round your answer to two decimal places.)

A bank wants to know if the enrollment for new savings accounts has improved at various...

A bank wants to know if the enrollment for new savings accounts has improved at various branches after offering a free iPhone X to customers. Use the data from "iphoneX" sheet in excel Run the appropriate statistical test with α=0.05. Which of the following are correct? More than one answer is possible. There was a decrease of 0.7 people enrolled on average in a new savings account after offering a free iPhone X. There was an increase of 0.7 people...

The World Bank has data on savings rates and GDP growth rates for most countries of...

The World Bank has data on savings rates and GDP growth rates for most countries of the world. Download the data and create a scatter plot between those two variables for 2019. Is there an obvious relationship between growth rates and savings rate? Explain why you might see what you observe.

A financial institution has entered into a 10-year currency swap with company Y.

A financial institution has entered into a 10-year currency swap with company Y. Under the terms of the swap, the financial institution receives interest at 3% per annum in Swiss francs and pays interest at 8% per annum in U.S. dollars. Interest payments are exchanged once a year. The principal amounts are 7 million dollars and 10 million francs. Suppose that company Y declares bankruptcy at the end of year 6, when the exchange rate is $0.80 per franc. What...

(Efficiency analysis) ALei Industries has credit sales of $145 million a year. ALei's management reviewed...

(Efficiency analysis) ALei Industries has credit sales of $145 million a year. ALei's management reviewed its credit policy and decided that it wants to maintain an average collection period of 40 days. a. What is the maximum level of accounts receivable that ALei can carry and have a 40-day average collection period? b. If ALei's current accounts receivable collection period is 50 days, how much would it have to reduce its level of accounts receivable in order to achieve...

Question