Supposed that the First National Bank has $300 million worth of rate sensitive assets and $700 million of rate sensitive liabilities, then what will happen to the bank's profits or loss if the market interest rate unexpected increases by 3 percentage point. Show your calculation and explain.

Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter12: Money, Banking And The Financial System
Section: Chapter Questions
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Supposed that the First National Bank has $300 million worth of rate sensitive assets and $700 million of rate sensitive liabilities, then what will happen to the bank's profits or loss if the market interest rate unexpected increases by 3 percentage point. Show your calculation and explain.

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