8-67 Suppose that interest rates rise by 2 percent on both RSAs and RSLs.The expected annual change in net interest income of the bank is
A)-$300,000.
B)$500,000.
C)-$2,800,000.
D)-$3,000,000.
E)$300,000.

Question

Quizplus · Accepted Answer

The expected annual change in net interest income is calculated by considering the difference between the change in interest income from RSAs and the change in interest expense from RSLs. If both RSAs and RSLs increase by the same percentage, the net effect on interest income will be determined by the net position of RSAs and RSLs. The given options suggest that the net change is $300,000.

8-67 Suppose That Interest Rates Rise by 2 Percent on Both