Consider the Following Information to Answer the Question What Will Be the FI's Net Interest Income at Year-End

question 26

Multiple Choice

Consider the following information to answer the question: $$\begin{array} { | l | l | l | l | l | l | } \hline \text { Assets } & \text { Amount } & \text { Rate } & \text { Liabilities } & \text { Amount } & \text { Rate } \\\hline \text { Rate } & \$ 35000000 & 10 \% & \text { Rate } & \$ 40000000 & 8 \% \\\hline \text { Sensitive } & & & \text { Sensitive } & & \\\hline \text { Fixed rate } & \$ 21000000 & 9 \% & \text { Fixed rate } & \$ 12000000 & 7 \% \\\hline \text { Non-earning } & \$ 4000000 & & \text { Equity } & \$ 8000000 & \\\hline\end{array}$$ What will be the FI's net interest income at year-end if interest rates do not change?

• A)$3.20 million
• B)$5.39 million
• C)$1.89 million
• D)$1.35 million

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Definitions:

Demand

The desire and ability of consumers to purchase goods and services at a given price.

Markov Analysis

Forecast of a firm’s future human resource supplies, using transitional probability matrices reflecting historical or expected movements of employees across jobs.

What If

Refers to a method of questioning or analysis used to explore possibilities, predict outcomes, or understand scenarios hypothetically.

Possible Future Scenarios

Hypothetical situations or outcomes that may occur in the future, used for planning and strategizing.