User Account

All Pages

What is the bank asset-liability mismatch

Assignment Help Finance Basics
Reference no: EM132525416

Suppose that a bank has $10 billion of 1-year loan and $15 billion of 5-year loan. These are financed by $15 billion of 1-year deposit and $7 billion of 5-year deposit. The bank has equity totaling $2 billion and its ROE (return on equity) before tax is currently 10%.

(a) What is the bank's asset-liability mismatch?

(b) What is the profit before tax? 

(c) Let X% be the rise in interest rates next year so that the bank's ROE will be reduced to half. What is the value of X?

Reference no: EM132525416

Questions Cloud

Prove that the interest rate implicit in the lease : a) Prove that the interest rate implicit in the lease is 10 percent.
State why believe each is relevant to case : On March 1, year 1,Marvin Corporation received the vehicle. identify the key terms, and state why you believe each is relevant to your case
Credit card company set the minimum payment : You don't use the credit card for any other purchases. does the credit card company set the minimum payment so low, at only 3% of your balance?
What is the ending cash balance for March : The cash balance on March 1 is P4,000. A minimum cash balance of P3,000 is required at the end of the month. What is the ending cash balance for March
What is the bank asset-liability mismatch : Suppose that a bank has $10 billion of 1-year loan and $15 billion of 5-year loan. These are financed by $15 billion of 1-year deposit and $7 billion of 5-year
Show the liquidation account and shareholders distribution : Show the liquidation account and shareholders distribution account in the record of crabs Ltd. Liquidation of acquiree, Accounting by acquirer
Determine cost of completed and transferred-out production : The beginning work in process inventory had cost of $25,000. Determine the cost of completed and transferred-out production
Make journal entry to account for impairment of goodwill : Assume instead that at the end of the reporting period the management of Snowy Ltd determines that the recoverable amount of the cash-generating unit
Name 3 or more systematic or unsystematic risks : Name 3 or more systematic or unsystematic risks a company might face

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd