Balance Sheet Assignment | Homework For You
May 26th, 2020
Question 3
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The Balance Sheet of Hedge Row Bancorp (In Millions) is provided below.
Asset |
Amount |
Liability & Equity |
Amount |
Cash (Non-Interest Earning) |
10.0 |
Demand Deposit (One-Year Maturity) |
70 |
Short Term Consumer Loan (One-year Maturity) |
140 |
Demand Deposit (Two-year Maturity) |
40 |
Long Term Consumer Loan (Two-Year Maturity) |
150 |
Three-Month Certificate of Deposits (CDs) |
140 |
Three-Month Treasury Bills |
145 |
Three-Month Bankers Acceptances |
100 |
Six-Month Treasury Notes |
110 |
Six-Months Commercial Paper |
155 |
Five-year Treasury Bond |
85 |
One-Year Time Deposit |
195 |
10 Year, Fix Rate Mortgages |
120 |
Two-Year Time Deposits |
170 |
30-Year, floating-Rate Mortgages (Rate Adjusted every nine months) |
230 |
Equity Capital (Fixed) |
120 |
Total Assets |
990 |
Total Liability & Equity |
990 |
- Calculate the cumulative one-year repricing gap (CGAP) for Hedge Row Bancorp.
- Based on the answer from a) explain which risk Hedge Row Bancorp would be exposed to.
- Calculate the Cumulative one-year impact on net interest income of Hedge Row Bancorp of a 1¼% (125 basis points) increase in interest rates on both rate sensitive assets and rate-sensitive liabilities.
- The weighted average Duration of the assets of Hedge Row Bancorp is calculated at 3.6 years, while the weighted-average duration of it’s liabilities is calculated at 2.8 years. The market value of the liabilities equates to the book value. With interest rate expected to rise from 9% to 10%.
- Calculate the potential impact on the market value of the equity of Hedge Row Bancorp.Get Finance homework help today