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Question
Bank of the Atlantic has liabilities of $4 million with an average maturity of two years paying interest rates of 4.0 percent annually. It has assets of $5 million with an average maturity of 5 years earning interest rates of 6.0 percent annually.
What is the bank's net interest income in dollars in year 3, if it refinances all of its liabilities at a rate of 8.0 percent?
A. -$20,000.
B. -$10,000.
C. -$15,000.
D. +$20,000.
E. +$10,000.
Answer
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