The balance sheet of XYZ Bank appears below. All figures in millions of U.S. dollars.

-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

The balance sheet of XYZ Bank appears below. All figures in millions of U.S. dollars. 
 
-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.

Quizplus · Accepted Answer

Effect of 2 percent increase in rates
 ∆NII = (CGAP) x ∆R
 ∆NII = $15,000,000 x 0.02 = +$300,000.

The Balance Sheet of XYZ Bank Appears Below