Suppose you are the manager of a bank that has$15 million of fixed-rate assets, $30 million of ratesensitive assets, $25 million of fixed-rate liabilities,and $20 million of rate-sensitive liabilities. Conduct agap analysis for the bank, and show what will happento bank profits if interest rates rise by 5 percentagepoints. What actions could you take to reduce thebank’s interest-rate risk?
Suppose you are the manager of a bank that has$15 million of fixed-rate assets, $30 million of ratesensitive assets, $25 million of fixed-rate liabilities,and $20 million of rate-sensitive liabilities. Conduct agap analysis for the bank, and show what will happento bank profits if interest rates rise by 5 percentagepoints. What actions could you take to reduce thebank’s interest-rate risk?
Chapter9: The Cost Of Capital
Section: Chapter Questions
Problem 16P
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Suppose you are the manager of a bank that has
$15 million of fixed-rate assets, $30 million of ratesensitive assets, $25 million of fixed-rate liabilities,
and $20 million of rate-sensitive liabilities. Conduct a
gap analysis for the bank, and show what will happen
to bank profits if interest rates rise by 5 percentage
points. What actions could you take to reduce the
bank’s interest-rate risk?
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