What is the Net Interest Margin (NIM)
Q: What is Interest Rate Risk and Cash Flow Risk
A: Interest rate risk: The interest rate risk is the risk that occurs due to the change in the interest…
Q: Increasing interest expense will have what effect on EBIT?
A: EBIT stands for Earnings before Interest and Tax, the amount earned by the company from the…
Q: Define term structure of interest rates
A: The term structure of interest rates generally alluded to as the yield curve, portrays the coupon…
Q: The difference between the nominal interest rate and the effectiveinterest rate.
A: The nominal interest rate is the interest rate paid annually without compounding period. The…
Q: How can we calculate the Times-Interest-Earned Ratio?
A: Times Interest Earned Ratio: It is one of the solvency ratios. It is a measure to evaluate the net…
Q: what is the interest rate
A: Interest rate is the rate at which the bank or any other lenders charges from the borrowers for…
Q: The interest coverage ratio is times.
A: Interest coverage ratio is a financial metric that helps in determining the ability of a business…
Q: What is interest coverage ratio?
A: The interest coverage ratio is the ratio which shows the ability of the company to pay the interest…
Q: Present using the rate of return method (ROR) with the formula. If the NPV is used to determine the…
A: Here, Net Cash Flow is 31250 Rate of Interest is 10% Initial Investment is 100000 NPV is 18462…
Q: How to calculate Present Value Interest Factors?
A: PVIF is known as Present Value Interest Factor. PVIF refers to a factor that is very useful in…
Q: What are the benefits of interest tables?
A: The question is based on the concept of interest table.
Q: Write the methods of Calculating Interest?
A: Methods of calculating interest: The basic and fundamental methods for calculating interests are…
Q: What is interest rate?
A: Answer: At a particular situation, an interest rate determines how much money a borrower promises to…
Q: Which factor determines how much will be saved at different interest rates?
A: The time preference of the consumer for consumption helps in determining the amount that will be…
Q: The nominal rate of interest would be %.
A: We can define real interest rate as those interest rates which have been adjusted for the inflation…
Q: Calulate the effective interest rate.
A: Here, Value of Note is $29,059 Simple Interest Rate is 8% Time Duration of Note is 12 months
Q: What is risks and interest rate
A: Risks and interest rate are tied together in case of fixed income instruments like bonds.
Q: What does the annuity factor indicate?
A: Annuity factor It indicates the discounted factor’s sum for all the n maturities when all n…
Q: When is it recommended to compute the effective interest rate per payment period?
A: When there is a compounding of interest, then the EIR per payment period is recommended. As it is a…
Q: What is Inflation Premium?
A: Inflation premium: An inflation premium is the piece of the common interest rate coming about…
Q: How is Compound Interest calculated?
A: Compound interest refers to the addition of interest amount to the principal. The concept of…
Q: Interest cost is calculated by multiplying the______by the ______?
A: Interest cost is calculated by multiplying the Principle amount by one plus the annual interest…
Q: Illustrate with examples , that Interest rate is equivalent to the savings rate from the deposits?
A: Interest received It is the amount that is received to a person for the investment made. A rate at…
Q: clearly distinguish between norminal interest rate and effective interest rate
A: The term interest rate can be defined as the fixed income received on the investment. . There are…
Q: Define each of the following terms:m. Term structure of interest rates; yield curve
A: Term structure of interest rates: Term structure of interest rates is defined as the association…
Q: What is the accounting rate of return?
A:
Q: ernal rate of return and the discount rate turn pany's discount rate or internal rate of return unt…
A: To find the correct option as,
Q: What is net interest margin(NİM)?
A: There are various profitability ratios
Q: Define the term the effective interest rate covering the payment period?
A: Interest rates can be of two types- Simple interest rate- This is the interest rate stated in the…
Q: ctive interest rate
A: The objective is to find the name of the interest that is defined as the interest paid on the…
Q: 1. How are interest rates determined? Discuss and explain the interest rate equation and its…
A: Interest rate can be defined as the price that lenders charge for lending their money to borrowers.…
Q: Explain the prime interest rate.
A: Interest are generally charged on the loans. Borrowers are needed to pay the interest to the person…
Q: Why there is a difference between the interest rate and the APR
A: Interest rates and APR are two phrases that are sometimes used interchangeably to refer to…
Q: sly. What is the effective interest rate e
A: Introduction: Effective interest rate also known as effective annual rate(EAR) is the interest that…
Q: How is the PW analysis dependent on the rate of interest used for the PW computation?
A: Net present value (or) PW analysis is one of the capital budgeting techniques. When a company is…
Q: how to calculate FLEV and Spread and Noncontorlling interest ratio
A: Financial Leverage is a financial ratio that represents the relationship between the total debt and…
Q: Illustrate the methods of calculating Interest?
A: Traditionally, there are two methods of calculating interest : 1. Simple interest rate method 2.…
Q: By which symbol is the break-even interest rate denoted?
A: Break-even interest rate is the maximum rate of interest before negative leverage.
Q: Explain the effective lending rate (ELR) and how it is derived?
A: ELR is generally used to know the true cost of lending. This concept is useful when be borrow money…
Q: Describe the Equivalence Calculations with Effective Interest Rates?
A: The effective interest rate is the real interest rate that is charged on the loan amount when the…
Q: What advantage does the fixed charge coverage ratio offer over simply using times interest earned?
A: The fixed-charge coverage ratio (FCCR) assesses a company's ability to cover fixed costs such as…
Q: What are the methods of calculating Interest?
A: Interest is an additional amount received on a deposited amount for a deposited period. It increases…
Q: What is the Cumulative interest payment?
A: Cumulative interest payment is the sum of all previous interest payments that are made for an…
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- Calculate the amount of liquidity a bank can generate from selling its AFS portfolio using the following information:USTs held in AFS = $92,053,000Securities held in HTM = $13,500,000Loans = $69,680,000Settlement occurs on T+2Maturing on T+1 = $16,000,000Haircut = 5%USTs in AFS used as collateral for RP liabilities (i.e./ "encumbered") = $19,740,000 $56,313,000 $53,497,350 $52,697,350 $51,710,350Consider the balance sheet of one of several identical banks:AssetsLiabilities & Net WorthCash Reserves $ 400Deposits$ 2,000Loans$ 1,600Borrowing$ 0What is the required reserve ratio?QUESTION 3 Below is the balance sheet Composition and Average Interest rates of Liberty Bank: Details Assets Yield Rates Liabilities Interest Costs Rate sensitivity 52,000 7% 30,000 3% Fixed rate 64,000 9% 18,000 4% Non earning/Non paying 280,000 23,800 Equity 328,200 Total 400,000 400,000 Required: a.) Determine the Net interest income of Liberty Bank? b.) Calculate the gap of Liberty Bank and explain the change in net interest income if the yield rate and interest cost increases? c.) What is the Net interest margin of Liberty Bank? d.) What is the difference between RSA and RSL?
- Consider the following bank balance sheet and the associated yields for earning assets and costs of liabilities. Assets Amount (000). Rate cash 400. 0% securitie 1600. 6.5% commercial loans 4000 9.0% credit card loans 3300. 10.0% loss reserves. 200 other assets 500 total assets. 10,000 Liabilities and equity Demand deposits. 1600 MMDAs. 3600 6.0% CDs. 2600 6.5% ST deposits. 1360. 5.0% Deferret tax credit. 200 Equity 640 total. 10000 Assume that net charge-offs $44,000 cash taxes paid $78,000 and allocated risk capital is $550,000 with a capital charge of 6 percent. determine : a) Calculate and show the bank income statement.a)Assume that the following data is extracted from the financial statements of Richy-Rich bank: equity is $350 million, interest expense is $115 million, provision for loan loss (P) is $35 million, noninterest income is $30 million, noninterest expense is $50 million and a tax rate is 33%. What is the minimum total interest income required to give a return on equity (ROE) of 20%? Show workings when necessary. b) Be-smart Bank reported an equity multipler ratio of 6.5 at the end of year 2021. If the bank’s total debt at the end of year 2021 was $5 million, how much of its assets were financed with equity? Show calculations when necessary. c) What are the main sources of funding for commercial banks? Using bullet points, classify these sources and briefly describe each category.Consider the following repricing buckets: Repricing Bucket Assets Liabilities 1 day $100,000 $240,000 1 day to 3 months $200,000 $140,000 3 to 6 months $200,000 $200,000 6 to 12 months $500,000 $160,000 1 to 5 years $150,000 $260,000 Over 5 years $50,000 $200,000 What is the change in the bank’s future net interest income if the average rate change for assets and liabilities that can be repriced within 12 months is an decrease of 1%? Round your final answer to 2 decimal places. E.g. if the final answer is -$3,590 , type -3,590 in the answer box. If the final answer is $3,590 , type 3,590 in the answer box (i.e do not type the dollar sign) .
- Use the following information about IGI security dealer. Market yields are in parenthesis, and amounts are in millions. Assets Liabilities and Equity Cash $10 Overnight Repos $170 1 month T-bills (7.05%) 75 Subordinated debt 3 month T-bills (7.25%) 75 7-year fixed rate (8.55% 150 2 year T-notes (7.50%) 50 8 year T-notes (8.96%) 100 5 year munis (floating rate) (8.20% reset every 6 months) 25 Equity 15…XYZ Bank has the following Balance sheet: K’M K’million Cash 20 Demand Deposits 100 15-yr, 10% Loan 160 5-yr, 6% CD Balloon 210 30-yr, 8% Bond 300 20-yr, 7% Debenture 120 Total Assets 480 Equity 50 Total Liabilities and Equity. 480 What is the Maturity Gap?In the following balance sheet, Loan A(8%, 3 year)= $150 Deposit A(5%, 2 years)=$250Loan B(11%, 4 years)= $200 Deposit B(7%, 3 year)= $100Total Assets = $350 Total Liabilities = $350The GAP 3 yr=-200 if all interest rates decrease by 3%, net impact on net interest income (ΔNII) is a. +$6 b. +$7 c. +$8 d. +$9
- Company Flora has the following items on its B/S: Money at bank ( no maturity) : USD 52,000 at 1% LT securities (2 years) : USD 135,000 invested at 10% Overdraft from bank (no maturity): USD 17,000 at 4% Equity ( 5 years) : USD 100,000 LT borrowings (2 years): USD 120,000 at 3% Financial assets (5 years): USD 135,000 at 1.5% ST borrowings (8 months): USD 119,000 at 8% Calculate the net interest margin for the company? (total inflows from interest - total outflows from interest) *1.Consider the following repricing buckets: Repricing bucket Assets Liabilities 1 day $150,000 $240,000 1 day to 3 months $200,000 $140,000 3 to 6 months $200,000 $200,000 6 to 12 months $500,000 $160,000 1 to 5 years $150,000 $260,000 Over 5 years $50,000 $200,000 What is the annualised change in the bank’s future net interest income if the average rate change for assets and liabilities that can be repriced within one year is an increase of 0.5%? Round your final answer to 2 decimal places. E.g. if the final answer is $583.117 please type 583.12 in the answer box (do not type the dollar sign). 2.Key financial data and ratios are reported in the table below for ABC bank and for its competitor, DEF bank: Ratio ABC Bank DEF Bank Profit margin 6% 8% ROA 16%…Choose the correct letter of answer: Company D's current assets and current liabilities are P200,000.00 and P140,000.00 respectively. How much additional funds can it borrow from banks for short term, without reducing the current ratio below 1.33? a. P13,800.00b. P86,200.00c. P52,612.00d. P35,870.00e. P41,818.00
