-
+1 - 312-224-1615
Get in touch with us
-
support@helpwithassignment.com
Send us an e-mail
Solution Library
Calculation Of Change In Assets, Liabilities And Equity of Bank On Change In Interest Rates
Question
All assets and liabilities are currently priced at par and pay interest annually.
|
Assets |
Amount ($ millions) |
Annual Rate |
Liabilities |
Amount ($ millions) |
Annual Rate |
|
2-year loans |
$40 |
8 % |
5-year term deposit |
$30 |
6 % |
|
3-year loans |
$60 |
8 % |
3-year CD |
$60 |
7 % |
|
|
|
|
Equity |
$10 |
|
|
Total |
$100 |
|
Total |
$100 |
|
1. What is the change in the value of its assets if all interest rates decrease by 1 percent?
a. Approximately $1.61 million.
b. Approximately $2.29 million.
c. Approximately $1.93 million.
d. Approximately $2.20 million.
e. Approximately $2.52 million.
2. What is the change in the value of its liabilities if all interest rates decrease by 1 percent?
a. Approximately $2.0 million.
b. Approximately $2.3 million.
c. Approximately $2.6 million.
d. Approximately $2.9 million.
e. Approximately $3.2 million.
3. What is the effect on the value of the FI’s equity if interest rates decrease by 1 percent?
a. Gain of $0.6968 million.
b. Gain of $0.30 million.
c. Loss of $1.6212 million.
d. No change in equity.
e. Loss of $0.6048 million.
4. What should be the rate on the two-year loan in order for the value of the equity to remain at $10 million? Assume the interest rates for all other instruments decreased by 1 percent.
a. 5.50 percent.
b. 6.19 percent.
c. 4.15 percent.
d. 6.54 percent.
e. 7.25 percent.
Summary
This question belongs to Finance and it is about calculation of change in the value of assets and liabilities if interest rates decrease and effect of value of bank’s equity if interest rates decrease. These have been answered in the solution with calculations.
Total Word Count 237
Download Full SolutionWHAT OUR STUDENTS SAY
1.: I had used another online accounting assignment help provider earlier for one of my accounting assignments and my professor immediately found out that it was not my work. But with TheReliableTutor and their assignment help experts who are from Singapore itself I have never faced this problem and have been happily using their services for the past two semesters.
Chan Heng Chee Student
Writing Algorithm is not an easy job! Especially for a third semester student! I was really lost and was not sure about what exactly to do. I was seriously thinking of quitting the course and returning home when I came across TheReliableTutor.com. Since then it is a wonderful experience. Not only that I know the difference between a Java code and MSQL one but also I got good grades and things are looking very positive."
Michel Obi Student
Corporate Finance can be a difficult topic if you do not get the proper guidance with your assignments. With TheReliableTutor I never have to worry about not understanding the corporate finance assignment material as the writing is always very lucid and absolutely comprehensible to all"
Julia Reynolds Student
The corporate strategy case study which I was handed over by my professor was a bit difficult and I was not certain that I would be able to meet the standards. So I looked online for help and eventually landed here in HwA. I was thrilled to see that the experts here are all well aware of my syllabus and they did a fantastic job in providing an excellent solution.
Kevin McGrouther Student
Most other online HRM tutoring services I have used were basically one way communication with the tutor simply providing with the cut and dried answers to the questions without really going to the heart of the questions. The online HRM tutor at HwA were different in the sense that they were more focused on helping me actually understand the subject and guiding me to write the HRM assignment and HRM homework rather than providing readymade solutions. Each HRM Online Tutoring session was a two way communication that helped me get even the minutest doubts cleared and understand the underlying concepts of the theories better.
Edward Meyers Student
Comments
this is a very good website
I have 50 questions for the same test your page is showing only 28
hi can you please help or guide me to answer my assignments. thanks
hi can anyone help or guide me to my assignments. thanks
This solution is perfect ...thanks
Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes
Perfect bank of solution.
great !
thanks for the quick response. the solution looks good. :)
thnx for the answer. it was perfect. just the way i wanted it.
works fine.