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What is the interest rate risk that bankers face

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Problem 1: What is "the interest rate risk" that bankers face. Explain it in plain language. Supposed that the First National Bank has $300 million worth of rate sensitive assets and $700 million of rate sensitive liabilities, then what will happen to the bank's profits or loss if the market interest rate unexpected increases by 3 percentage point. Show your calculation and explain.

Reference no: EM132949878

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