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Question
The Tidewater State Bank has $1000 in total assets (all of which are earning assets), $700 of which will be repriced with in the next 90 days. This bank also has $800 in total liabilities, $400 of which will be repriced within the next 90 days. Currently, the bank is earning 8% on its assets and is paying 5% on its liabilities. If interest rates on both assets and liabilities rise by 2% in the next 90 days, what would this banks net interest margin be?
A) 4%
B) 4.4%
C) 4.6%
D) 2.4%
E) 6%
Answer
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Related questions
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B) .5%
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A) It should rise
B) It should fall
C) It should stay the same
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Which of the following would be an example of a nonrepriceable liability?
A) Money the bank has borrowed from the money market
B) Cash in the vault
C) Demand deposits that do not pay an interest rate
D) Short term securities issued by the government about to mature owned by the bank
E) All of the above are examples of repriceable assets
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B) Inflation risk
C) Liquidity risk
D) Call risk
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A) Flat
B) Downward-sloping
C) Vertical
D) Upward-sloping
E) Kinked
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Harrison Bank has the following financial information. ROE
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$1000 Total Assets
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Net Profit Margin
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$1000 Total Assets
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B) 10 %
C) 12.8%
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$100
Interest Income
$400 Securities Investments
$600
Interest Expenses
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Non-Interest Income
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$300
Non-Interest Expenses
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$800
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Interest Income
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Interest Expenses
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Non-Interest Income
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$300
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A) 20.45%
B) 18.33%
C) 12.22%
D) 7.33%
E) 2.5%
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B) Closure of a bank for three months due to flooding from a major hurricane
C) Embezzlement of funds of a bank by a teller of the bank
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B) Interest on time deposits/ total time deposits
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A bank that has a low profit margin most likely:
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B) Interest sensitive assets/interest sensitive liabilities
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OE for a bank reflects:
A) How well the assets of the bank are managed
B) The bank's use of leverage
C) How well the bank controls expenses
D) All of the above
E) None of the above
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A) Counterparty risk
B) Interest-rate risk
C) Operating risk
D) Credit risk
E) Liquidity risk
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Possible breakdowns in quality control, inefficiencies in producing and delivering financial services, weather damage, aging or faulty computer systems and simple errors in judgment by bank management illustrate what form of risk faced by banks?
A) Credit risk
B) Liquidity risk
C) Interest-rate risk
D) Operational risk
E) None of the above
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A) Profit margin.
B) Asset utilization.
C) Equity multiplier.
D) Earnings retention ratio.
E) All of the above.
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is long-term debt capital whose claims legally follow claims of depositors.
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represents funds set aside for contingencies such as legal action against the institution as well as providing a reserve for dividends expected to be paid but not yet declared and a sinking fund to retire stock or debt in the future.