Consider the following Balance Sheet for Forward Thinking CommercialBank(FTCB) (in millions)Assets Liabilities Floating rate mortgages (currently 14% annually)250Demand deposits (currently 5% annually)30030 years fixed rate loans1201 year CD(currently 8% annually)50 Equity20 370 370a. What is FTCB expected net interest income (NII) at year end? b. What is FTCB expected net interest income at year end if interest rates fell by seven percent (7%). c. What is FTCB expected net interest income at year end if interest rates grew by 300 basis points on assets, but decline by 2% on liabilities.

Net Interest Income Net Interest Income is the difference between the amount of total mortgagee /…

Answered: Consider the following Balance Sheet…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 2MCQ

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Consider the following Balance Sheet for Forward Thinking Commercial
Bank(FTCB) (in millions)

Assets		Liabilities
Floating rate mortgages (currently 14% annually)	250	Demand deposits (currently 5% annually)	300
30 years fixed rate loans	120	1 year CD (currently 8% annually)	50
		Equity	20

	370		370

a. What is FTCB expected net interest income (NII) at year end?

b. What is FTCB expected net interest income at year end if interest rates fell by seven percent (7%).

c. What is FTCB expected net interest income at year end if interest rates grew by 300 basis points on assets, but decline by 2% on liabilities.

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