A6)After the collapse of a bank such as SVB, businesses find it harder to get loans.
True Or False
A7)
Use the balance sheet of a bank below to answer the following. The duration of asset is 1.5 years, the duration of liabilities 2 years.
Assets _Liabilities_______________________
T-bills 85 m Capital 10 m
Mortgages 15 m
Commercial Paper 5m
Select the amount of RSA.
A)90 m
B)93 m
C)5 m
D)100 m
A8)
Use the balance sheet of a bank below to answer the following. The duration of asset is 1.5 years, the duration of liabilities 2 years.
Assets _Liabilities_______________________
Required Reserves 8 m Money Market Deposits 50 m
Excess Reserves 7 m 3-year CDs 60 m
T-bills 85 m Capital 10 m
Mortgages 15m
Commercial Loans 5
If the interest rate goes down by 1%, its net worth goes ________.
A)down
B)nothing happens
C)sideways
D)up
A9)
Use the balance sheet of a bank below to answer the following. The duration of asset is 1.5 years, the duration of liabilities 2 years.
Assets _Liabilities_______________________
Required Reserves 8 m Money Market Deposits 50 m
Excess Reserves 7 m 3-year CDs 60 m
T-bills 85 m Capital 10 m
Commercial paper 5m
Mortgages 15m
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What is the change in this bank’s net income if the interest drops by 1%?
A)goes down by $1 million
B)goes up by $400,000
C)goes down by $400,000
D)goes up by 20%
A10)
Use the balance sheet of a bank below to answer the following. The duration of asset is 1.5 years, the duration of liabilities 2 years.
Assets _Liabilities_______________________
Required Reserves 8 m Money Market Deposits 50 m
Excess Reserves 7 m 3-year CDs 60 m
T-bills 85 m Capital 10 m
Mortgages 15m
Commercial paper 5m
What happens to the value of liability if the interest rate goes down by 1%?
A)down by 1.36%
B)down by 2%
C)up by 1.36%
D)up by 2%
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