If Capital Two Bank (CTB) finances a $250,000 2-year fixed-rate loan with a $200,000 1-year fixed-rate CD, based on the repricing model, what is the change in CTB's net interest income for the 1-year maturity bucket when interest rates decrease by 100 basis points? O A $500 OB. $2,000 OC.-$500 OD.-$2,000
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- 2. An investor borrows $2m from XYZ Bank at LIBOR-90 plus a quoted margin of 2%. If the LIBOR-90 effective for the 90-day loans equals 5%, the amount of interest that the investor will pay XYZ Bank is closest to: A. $140,000 B. $35,000 C. $65,000OZ Bank finances a $53000 2-year fixed-rate loan with a $70000 1-year fixed-rate CD. Use the repricing model to determine (a) the OZ Bank's repricing (or funding) gap using a 1- year maturity bucket, and (b) the impact of a 30 basis point (0.3%) increase in interest rates on OZ Bank's annual net interest income? OA. $17000,-$51 O B. $70000, $210 O C. -$70000,-$210 O D. -$70000, $210 OE. -$17000, $515. If this loan had been made on a 10% add-on basis payable in 12 end-of-month installments, that would be the monthly payments? What is the annual percentage rate? The effective annual rate? ($45,833.33, 17.97%, 19.53%) E • How does the cost of costly trade credit generally compare with the cost of shortterm bank loans? L Focus F9 F10 F11 F12 8 9
- Problem E: Effective cost of Short‐term Loan:ABC will be acquiring a P4,000,000 loan from XYZ Bank. 13. The detail are 6‐month term, 3% interest, P40,000 bank chargeand P50,000 compensating balance.Required:1. How much is the compound effective annual interest?1. If you want to borrow K150,000 which of the following banks should you select? Explain clearly with necessary calculation. (i) Bank A requires quarterly repayments of K12,872.96 at the end of each quarter over 4 years. (ii) Bank B requires a total repayment of K276,360 at the end of 5 years.Data Back-Up Systems has obtained a $10,000, 90-day bank loan at an annual interest rate of 15%, payable at maturity. (Note: Assume a 365-day year.) 1.How much interest (in dollars) will the firm pay on the 90-day loan? Format: 111.11 2.Find the 90-day rate on the loan. Format: 1.11% 3.Annualize your result in part b to find the effective annual rate for this loan, assuming that it is rolled over every 90 days throughout the year under the same terms and circumstances. Format: 11.11%
- Consider the following Balance Sheet for Forward Thinking Commercial Bank(FTCB) (in millions) ASSETS LIABILITIES Floating rate mortgages 250 Demand deposits 300 (currently 14% annually) (currently 5% annually) 30 years fixed rate loans 1 year CD 50 (currently 9% annually) 120 (currently 8% annually) Equity 20 370 370 a. What is FTCB expected net interest income (NII) at year end? b. What is FTCB expected net interest income at year end if interest rates fell by seven percent (7%). c. What is FTCB expected net interest income at year end if interest rates grew by 300 basis points on assets, but decline by 2% on liabilities.\A man loans $4,000 at one interest rate and $5,000 at a 1% greater rate. The $5,000 loan earns $110 more per year than the $4,000 loan earns. Determine the following: The interest rates. Explain the concepts/principles that were considered and the factors that affected the condition of item (a)A BANK CHARGES 15% SIMPLE INTEREST ON A P500.00 LOAN. HOW MUCH WILL BE REPAID IF THE LOAN IS PAID BACK IN ONE LUMP SUM (FUTURE AMOUNT) AFTER THREE YEARS? O a. P572.00 O b. P752.00 O c. P725.00 O d. P275.00
- = Consider two loans with one-year maturities and identical face values: a(n) 8.4% loan with a 1.03% loan origination fee and a(n) 8.4% loan with a 4.5% (no-interest) compensating balance requirement. Which loan would have the higher effective annual rate? Why? The EAR in the first case is%. (Round to one decimal place.) er clIn the following balance sheet, Loan A(8%, 3 year)= $150 Deposit A(5%, 2 years)=$250Loan B(11%, 4 years)= $200 Deposit B(7%, 3 year)= $100Total Assets = $350 Total Liabilities = $350The GAP 3 yr=-200 if all interest rates decrease by 3%, net impact on net interest income (ΔNII) is a. +$6 b. +$7 c. +$8 d. +$9FRM. (Term=30 years, Note Rate = 5.25, Loan Amount = 800,000, Points=2) What is the FTL annual percentage rate (FTLAPR) that the lender must disclose to the borrower? O 5.375% ○ 4.750% O 4.875% O 7.000% O 6.905% O 7.011%