The balance sheet (book values) of Hedge Row Bancorp (in millions) is provided below. a)...
70.2K
Verified Solution
Link Copied!
Question
Finance
The balance sheet (book values) of Hedge Row Bancorp (in millions) is provided below. a) Calculate the cumulative one-year repricing gap (CGAP) for Hedge Row Bancorp. ( 6 marks) b) Based on the answer from a) explain which risk Hedge Row Bankcorp would be exposed to. (2 marks) c) Calculate the cumulative one-year impact on net interest income of Hedge Row Bancorp of a 11%% ( 125 basis points) increase in interest rates on both rate sensitive assets and rate sensitive liabilities. ( 4 marks) d) The weighted-average Duration of the assets of Hedge Row Bancorp is calculated at 3.6 years, while the weighted-average Duration of its liabilities is calculated at 2.8 years. The market values of the assets are estimated to be $1,000 (million), while the market value of the liabilities equate to the book value. With interest rate expected to rise from 9% to 10%, calculate the potential impact to the market value of the equity of Hedge Row Bancorp. (8 marks)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
