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Suppose that you are the manager of a bank that has​ $15 million of​ fixed-rate assets,​ $30 million of​ rate-sensitive assets,​ $25 million of​ fixed-rate liabilities, and​ $20 million of​ rate-sensitive liabilities. Conduct a gap analysisLOADING... for the​ bank, and show what will happen to bank profits if interest rates rise by 5 percentage points.

Respuesta :

Answer:

$0.5 Million

Explanation:

The computation of change in profits is shown below:-

Rate-sensitive assets  $30 million

Rate-sensitive liabilities $20  million

Gap = $30 million - $20  million

= $30 million - $20 million

= $10 million

x rise in percentage points = 5%

Change in profit = Gap × x rise in percentage points

= $10 × 5%

= $0.5 Million